Capital Dividend Account
The capital dividend account (“CDA”) is calculated at a particular point of time, other than additions as a result of dispositions of good-will. The account is calculated for the period commencing with the first taxation year after the corporation last became a private corporation and that ended after 1971.
A change in the status of a corporation as a Canadian Controlled Private Corporation (CCPC) will have negative consequences on the CDA account balance.
Basic Components of the CDA are:
- Untaxed portion of capital gains minus capital losses;
- Capital dividend received;
- Portion of proceeds on sale of eligible capital property;
- Portion of life insurance proceeds; and
- Capital dividends paid.
Disclaimer: Articles are for general information only and do not constitute tax advice. They cannot be relied upon.
Sam Faris is a Toronto-based Chartered Professional Accountant who practices as an independent consultant on high-level Canadian tax matters and handling disputes with CRA.He also published an article recently in the business magazine: HERE.