I-3 - Taxation Act

Section 568 Disposition versions

2006-03-01

568. The following rules apply where the corporation is deemed to pay a dividend at a particular time under section 505 on shares of any class of its capital stock:

(a)  for the purposes of the election provided for in section 502 or 1106 and, if the corporation has so elected, for all other purposes, such dividend is deemed to be a separate dividend to the extent that it does not exceed its capital dividend account or its capital gains dividend account within the meaning of the regulations made under section 567, as the case may be, immediately before that time;

(a.1)  (paragraph replaced);

(b)  the portion of the dividend equal to the lesser of its pre-1972 capital surplus on hand within the meaning of the regulations made under section 567, immediately before the particular time, and the amount by which the dividend exceeds the portion that has been the subject of an election under section 502 is deemed not to be a dividend;

(c)  the portion of the dividend that exceeds the aggregate of the amount deemed, under paragraph a, to be a separate dividend for all purposes and the portion deemed under paragraph b not to be a dividend is deemed, notwithstanding paragraph g of section 570, to be a separate dividend that is a taxable dividend;

(d)  every person who holds shares of that class at that particular time is deemed to receive the proportion of any separate dividend determined under paragraph a or c represented by the proportion between the number of shares of that class held by him immediately before the particular time and the number of shares of that class then issued and outstanding.

1973, c. 17, s. 65; 1975, c. 22, s. 145; 1978, c. 26, s. 104; 1984, c. 15, s. 124; 1987, c. 67, s. 124; 1993, c. 16, s. 227; 1996, c. 39, s. 273; 1997, c. 3, s. 71.