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s. 184

PART III — Additional Tax on Excessive Elections

Tax on excessive elections

Not yet annotated · Text current to 2026-06-21 · section last amended 2013-06-26

Current text

(2)

If a corporation has elected in accordance with subsection 83(2), 130.1(4) or 131(1) in respect of the full amount of any dividend payable by it on shares of any class of its capital stock (in this section referred to as the “original dividend”) and the full amount of the original dividend exceeds the portion of the original dividend deemed by that subsection to be a capital dividend or capital gains dividend, as the case may be, the corporation shall, at the time of the election, pay a tax under this Part equal to 3/5 of the excess.

(2.1)

[Repealed, 2013, c. 34, s. 327]

Election to treat excess as separate dividend

(3)

If, in respect of an original dividend payable at a particular time, a corporation would, but for this subsection, be required to pay a tax under this Part in respect of an excess referred to in subsection (2), and the corporation elects in prescribed manner on or before the day that is 90 days after the day of sending of the notice of assessment in respect of the tax that would otherwise be payable under this Part, the following rules apply:

(a)

the portion of the original dividend deemed by subsection 83(2), 130.1(4) or 131(1) to be a capital dividend or capital gains dividend, as the case may be, is deemed for the purposes of this Act to be the amount of a separate dividend that became payable at the particular time;

(b)

if the corporation identifies in its election any part of the excess, that part is, for the purposes of any election under subsection 83(2), 130.1(4) or 131(1) in respect of that part, and, where the corporation has so elected, for all purposes of this Act, deemed to be the amount of a separate dividend that became payable immediately after the particular time;

(c)

the amount by which the excess exceeds any portion deemed by paragraph (b) to be a separate dividend for all purposes of this Act is deemed to be a separate taxable dividend that became payable at the particular time; and

(d)

each person who held any of the issued shares of the class of shares of the capital stock of the corporation in respect of which the original dividend was paid is deemed

(i)

not to have received any portion of the original dividend, and

(ii)

to have received, at the time that any separate dividend determined under any of paragraphs (a) to (c) became payable, the proportion of that dividend that the number of shares of that class held by the person at the particular time is of the number of shares of that class outstanding at the particular time except that, for the purpose of Part ​XIII, the separate dividend is deemed to be paid on the day that the election in respect of this subsection is made.

(3.1) and (3.2)

[Repealed, 2013, c. 34, s. 327]

Concurrence with election

(4)

An election under subsection (3) is valid only if

(a)

it is made with the concurrence of the corporation and all its shareholders

(i)

who received or were entitled to receive all or any portion of the original dividend, and

(ii)

whose addresses were known to the corporation; and

(b)

either

(i)

it is made on or before the day that is 30 months after the day on which the original dividend became payable, or

(ii)

each shareholder described in subparagraph (a)(i) concurs with the election, in which case, notwithstanding subsections 152(4) to (5), any assessment of the tax, interest and penalties payable by each of those shareholders for any taxation year shall be made that is necessary to take the corporation’s election into account.

Exception for non-taxable shareholders

(5)

If each person who, in respect of an election made under subsection (3), is deemed by subsection (3) to have received a dividend at a particular time is also, at the particular time, a person all of whose taxable income is exempt from tax under Part I,

(a)

subsection (4) does not apply to the election; and

(b)

the election is valid only if it is made on or before the day that is 30 months after the day on which the original dividend became payable.

Source: Justice Laws Website. Not an official version.

Historic text

Immediately preceding version, in force from 2010-12-15 to 2013-06-25:

Show the text in force 2010-12-15 to 2013-06-25


Tax on excessive elections

  • 184 (2) Where a corporation has elected in accordance with subsection 83(2), 130.1(4) or 131(1) in respect of the full amount of any dividend payable by it on shares of any class of its capital stock and the full amount of the dividend exceeds the portion thereof deemed by that subsection to be a capital dividend or capital gains dividend, as the case may be, the corporation shall, at the time of the election, pay a tax under this Part equal to 3/4 of the excess.

  • Reduction of excess

    (2.1) Notwithstanding subsection 184(2), where a corporation has elected in accordance with subsection 83(2) in respect of the full amount of a dividend that became payable by it at a particular time in its 1988 taxation year and before June 18, 1987, the amount of the excess referred to in subsection 184(2) in respect of the dividend shall be deemed, for the purposes of subsection 184(2), to be the amount of the excess that would have been determined under subsection 184(2) in respect of the dividend if the corporation’s taxation year had ended on December 31, 1987.

  • Election to treat excess as separate dividend

    (3) If, in respect of a dividend payable at a particular time after 1971, a corporation would, but for this subsection, be required to pay a tax under this Part equal to all or a portion of an excess referred to in subsection (2) of this section or subsection 184(1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, it may elect in prescribed manner on or before a day that is not later than 90 days after the day of sending of the notice of assessment in respect of the tax that would otherwise be payable under this Part, and on such an election being made, subject to subsection (4), the following rules apply:

    • (a) the amount by which the full amount of the dividend exceeds the amount of the excess shall be deemed for the purposes of the election that the corporation made in respect of the dividend under subsection 83(2), 130.1(4) or 131(1) of this Act or subsection 83(1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, and for all other purposes of this Act to be the full amount of a separate dividend that became payable at the particular time;

    • (b) such part of the excess as the corporation may claim shall, for the purposes of any election in respect thereof under subsection 83(2), 130.1(4) or 131(1) of this Act or subsection 83(1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, and, where the corporation has so elected, for all purposes of this Act, be deemed to be the full amount of a separate dividend that became payable immediately after the particular time;

    • (c) the amount by which the excess exceeds any portion deemed by paragraph 184(3)(b) to be a separate dividend for all purposes of this Act shall be deemed to be a separate dividend that is a taxable dividend that became payable at the particular time; and

    • (d) each person who held any of the issued shares of the class of shares of the capital stock of the corporation in respect of which the full amount of the dividend was paid shall be deemed

      • (i) not to have received any portion of the dividend, and

      • (ii) to have received at the time the dividend was paid the proportion of any separate dividend, determined under paragraph 184(3)(a), 184(3)(b) or 184(3)(c), that the number of shares of that class held by the person at the time the dividend was paid is of the number of shares of that class outstanding at that time except that, for the purpose of Part XIII, a separate dividend that is a taxable dividend, a capital dividend or a life insurance capital dividend shall be deemed to have been paid on the day that the election in respect of this subsection is made.

  • Election to treat dividend as loan

    (3.1) Where a corporation has elected in accordance with subsection 83(1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in respect of the full amount of any dividend that became payable by it at a particular time after March 31, 1977 and before 1979 and the corporation made a reasonable attempt to correctly determine its tax-paid undistributed surplus on hand immediately before the particular time and its 1971 capital surplus on hand immediately before the particular time and all or any portion of the dividend

    • (a) has given rise to a gain from the disposition of a share of the corporation by virtue of subsection 40(3), or

    • (b) is an excess referred to in subsection 184(1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952,

    if the corporation so elects under this subsection,

    • (c) in any case referred to in paragraph 184(3.1)(a), not later than December 31, 1982 or such earlier day as is 90 days after the latest of

      • (i) February 26, 1981,

      • (ii) the day on which a notice of assessment or reassessment is mailed to a shareholder of the corporation in respect of a gain referred to in paragraph 184(3.1)(a), and

      • (iii) such day as is agreed to by the Minister in writing, or

    • (d) in any other case, not later than 90 days after the later of

      • (i) February 26, 1981, and

      • (ii) the day on which the Minister notifies the corporation by registered letter that it has an excess referred to in subsection 184(1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in respect of the dividend,

    and the penalty referred to in subsection 184(5) in respect of the election is paid by the corporation at the time the election is made, the following rules apply:

    • (e) the whole dividend or such portion of it as the corporation may claim shall, for the purposes of this Act, be deemed not to be a dividend but to be a loan made at the particular time by the corporation to the persons who received all or any portion of the dividend if the full amount of the loan is repaid to the corporation before such date as is stipulated by the Minister and the corporation satisfies such terms and conditions as are specified by the Minister, and

    • (f) sections 15 and 80.4 do not apply to such a loan.

  • Idem

    (3.2) Where a corporation has elected in accordance with subsection 83(2) in respect of the full amount of any dividend that became payable by it at a particular time after December 3, 1985 and before 1986 and the corporation made a reasonable attempt to correctly determine its capital dividend account immediately before the particular time and all or any portion of the dividend is an excess referred to in subsection 184(2), if

    • (a) the corporation so elects under this subsection not later than 90 days after the later of

      • (i) December 19, 1986, and

      • (ii) the day on which the Minister notifies the corporation by registered letter that it has an excess referred to in subsection 184(2) in respect of the dividend, and

    • (b) the penalty referred to in subsection 184(5) in respect of the election is paid by the corporation at the time the election under this subsection is made,

    the following rules apply:

    • (c) the whole dividend or such portion of it as the corporation may claim shall, for the purposes of this Act, be deemed not to be a dividend but to be a loan made at the particular time by the corporation to the persons who received all or any portion of the dividend if the full amount of the loan is repaid to the corporation before such date as is stipulated by the Minister and the corporation satisfies such terms and conditions as are specified by the Minister, and

    • (d) sections 15 and 80.4 do not apply to such a loan.

  • Concurrence with election

    (4) An election under subsection 184(3) is not valid unless

    • (a) it is made with the concurrence of the corporation and all its shareholders

      • (i) who received or were entitled to receive all or any portion of the dividend in respect of which a tax would, but for subsection 184(3), be payable under this Part, and

      • (ii) whose addresses were known to the corporation; and

    • (b) either

      • (i) it is made on or before the day that is 30 months after the day on which the dividend became payable, or

      • (ii) each shareholder described in subparagraph 184(4)(a)(i) concurs with the election, in which case, notwithstanding subsections 152(4) to 152(5), such assessment of the tax, interest and penalties payable by each such shareholder for any taxation year may be made as is necessary to take the corporation’s election into account.

  • Penalty

    (5) The penalty in respect of an election under subsection 184(3.1) or 184(3.2) in relation to a particular dividend is an amount equal to the product obtained when $500 is multiplied by the proportion that the number of months or parts of months during the period commencing on the day the dividend became payable and ending on the day on which that election was made is of 12.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 184
  • 1994, c. 7, Sch. II, s. 152
  • 2010, c. 25, s. 48

This version on Justice Laws

Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 184 links to the one before it.

Enacting and amending legislation

  • R.S., 1985, c. 1 (5th Supp.), s. 184; 1994, c. 7, Sch. II, s. 152; 2010, c. 25, s. 48; 2013, c. 34, s. 327

Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.

Cross-references

This section refers to

s. 83s. 152

Referred to in

s. 185

References are generated from the statutory text and list other sections of the Act only.

Citation

Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 184.