MGAD65H3 Lecture Notes - Lecture 9: Dividend Tax, Capital Account, Life Insurance

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Only 50% of capital gains are taxed and the non-taxed portion (i. e. other 50%) is kept track in cda of a private corporation and can be returned to shareholder without any tax consequence to the shareholder. A public corporation does not have cda. Note that a capital dividend will not trigger dividend refund. To get a dividend refund, have to pay taxable dividends. 83(2) to treat the dividend as capital dividend. Cda balance is determined at a point in time (not a continuity). Amount distributed as capital dividend should not exceed the balance in that account. Excess payment will trigger a penalty tax of 60% on the excess amount. Untaxed portion of net capital gains plus. Capital dividends received from another corporation plus. Untaxed portion of net gains from cumulative eligible capital account (for pre- Puc is the amount paid by investors for shares from the corporation from after tax money.

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