Subsection 131(1) - Election re capital gains dividend
Administrative Policy
1 June 1999 T.I. 9830585
Because a capital gains dividend received by a shareholder of a mutual fund corporation is deemed to be a capital gain from the disposition of capital property, a private corporation receiving the dividend may add the non-taxable portion to its capital dividend account.
22 January 1997 Memorandum 7-970023
"For an investment corporation to qualify to make the election under subsection 131(1) to treat dividends as capital gains dividends, the dividends must be payable in a taxation year throughout which the corporation was an investment corporation. Accordingly, even though the corporation is an investment corporation throughout the year with respect to which a capital gains refund is being sought, dividends paid during the first 60 days of the corporation's following taxation year would qualify as capital gains dividends only if the corporation was an investment corporation throughout that subsequent taxation year."
Articles
Hugh Chasmar, "Mutual Fund 'Switch Funds'", Taxation of Corporate Reorganizations, Canadian Tax Journal, Vol. 46, No. 1, 1998, p. 172.
Discussion as to whether an exchange by an investor of shares of one class for shares of another could be treated as a redemption enabling utilization of a mutual fund corporation's capital gains dividend account.
Subsection 131(6) - Definitions
Capital Gains Dividend Account
Articles
H. Chasmar, "Mutual Funds 'Switch Funds'", the Taxation of Corporate Reorganizations, Canadian Tax Journal, Vol. 46, No. 1, 1998, p. 172.
Capital Gains Redemption
Administrative Policy
29 March 2001 T.I. 2000-005026
Where a shareholder of a mutual fund corporation redeems shares of a class, in accordance with the terms and conditions attaching to those shares, and exchange for shares of another class of the same corporation, s. 51(1) usually will apply to the exchange and there will not be an "amount paid by the corporation in the year on the redemption of shares as capital stock" for the purposes of A in the definition of "capital gains redemptions" in s. 131(6).
Subsection 131(8)
Administrative Policy
8 March 1991 T.I. (Tax Window, No. 2, p. 25, ΒΆ1189)
The disposition by a mutual fund corporation of all its investments, the distribution of all its assets and its winding-up will not disqualify the corporation as a mutual fund corporation for the year.