Subsection 191.1(1) - Tax on taxable dividends
Administrative Policy
18 October 89 Meeting with Quebec Accountants, Q.4 (April 90 Access Letter, ΒΆ1166)
Where a shareholder holds identical shares of a corporation some of which are taxable preferred shares and some of which were issued before 1987, and less than all of the shares are redeemed, the shareholder and the corporation may decide which of the shares will be considered to have been redeemed first. The choice must be made at the time of the redemption. Although a share certificate merely proves that its holder is entitled to the shares described therein and does not allow distinctions between those shares, if separate certificates have been issued for the two sub-categories of shares, then the apparent intention of the parties is that the cancelled certificate represents the redeemed shares. If there is no indication of the intent of the issuer or of the holder, RC will consider the taxable preferred shares to have been redeemed first.