Regulation 5901 - Order of Surplus Distributions

Table of Contents

Regulation 5901 - Order of Surplus Distributions
Subsection 5901(1)
Administrative Policy(2)
Subsection 5901(1.1)
Administrative Policy(1)
Subsection 5901(2)
Paragraph 5901(2)(a)
Administrative Policy(3)
Paragraph 5901(2)(b)
Administrative Policy(2)
Articles(4)

Subsection 5901(1)

Administrative Policy

27 September 1991 T.I. (Tax Window, No. 11, p. 13, ¶1513)

Unless some part of the international shipping business of the foreign affiliate is actually carried on in the country in which the foreign...

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2 July 1991 T.I. (Tax Window, No. 5, p. 15, ¶1326)

Where a non-resident subsidiary of a Canadian corporation which owns or charters vessels to engage in international traffic and maintains a...

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Subsection 5901(1.1)

Administrative Policy

30 October 2014 External T.I. 2013-0488881E5 - Upstream Loan

The Reg. 5901(1.1) election is treated as being applicable for a s. 90(9)(a) notional dividend received by Canco. See detailed summary of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) no double inclusion following FA creditor wind-up 60
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3) notional s. 40(3) gain does not generate surplus 70
Tax Topics - Income Tax Act - Section 90 - Subsection 90(6) no double inclusion following FA creditor wind-up or for 2nd loan in series 121
Tax Topics - Income Tax Act - Section 90 - Subsection 90(9) notional election and double taxation issues 1332
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(a) 90-day rule unavailable 28
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(b) notional Reg. 5901(2)(b) election 31
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Underlying Foreign Tax notional UFT disproportionate election 37

Subsection 5901(2)

Paragraph 5901(2)(a)

Administrative Policy

30 October 2014 External T.I. 2013-0488881E5 - Upstream Loan

The "90-day" rule does not apply to a s. 90(9)(a) notional dividend received by Canco. See detailed summary of Scenario 1 under s. 90(9).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) no double inclusion following FA creditor wind-up 60
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3) notional s. 40(3) gain does not generate surplus 70
Tax Topics - Income Tax Act - Section 90 - Subsection 90(6) no double inclusion following FA creditor wind-up or for 2nd loan in series 121
Tax Topics - Income Tax Act - Section 90 - Subsection 90(9) notional election and double taxation issues 1332
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(1.1) notional Reg. 5901(1.1) election 30
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(b) notional Reg. 5901(2)(b) election 31
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Underlying Foreign Tax notional UFT disproportionate election 37

1 April 2011 External T.I. 2008-0297541E5 - Ss. 5901(2) and the Timing of Dividends

FA2, which had no exempt or taxable surplus at the beginning of 2008 but will have exempt surplus of $100 at the end of 2008, is wholly owned by...

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15 January 1992 T.I. 9115295

FA1's only source of income in 1991 is the FA2 and FA3 dividends, described below, received from its wholly-owned subsidiaries, FA2 and FA3, and...

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Paragraph 5901(2)(b)

Administrative Policy

21 April 2015 Internal T.I. 2014-0560811I7 - FACL carryback – Surplus & PAS election

In 2010, CFA paid the "2010 Dividend" to its 100% parent ("Canco"). On audit, CRA identified that CFA had realized a capital gain (giving rise to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(3.2) no relief for late-filed Reg. 5901(2)(b) election 54
Tax Topics - Income Tax Regulations - Regulation 5903.1 - Subsection 5903.1(1) FACL carryback from transitional year 154
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Net Earnings surplus pools are not to be retroactively adjusted for a FACL carryback 171
Tax Topics - Income Tax Regulations - Regulation 600 no relief for late-filed Reg. 5901(2)(b) election 54

30 October 2014 External T.I. 2013-0488881E5 - Upstream Loan

The Reg. 5901(2)(b) election is treated as being applicable for a s. 90(9)(a) notional dividend received by Canco. See detailed summary of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) no double inclusion following FA creditor wind-up 60
Tax Topics - Income Tax Act - Section 40 - Subsection 40(3) notional s. 40(3) gain does not generate surplus 70
Tax Topics - Income Tax Act - Section 90 - Subsection 90(6) no double inclusion following FA creditor wind-up or for 2nd loan in series 121
Tax Topics - Income Tax Act - Section 90 - Subsection 90(9) notional election and double taxation issues 1332
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(1.1) notional Reg. 5901(1.1) election 30
Tax Topics - Income Tax Regulations - Regulation 5901 - Subsection 5901(2) - Paragraph 5901(2)(a) 90-day rule unavailable 28
Tax Topics - Income Tax Regulations - Regulation 5907 - Subsection 5907(1) - Underlying Foreign Tax notional UFT disproportionate election 37

Articles

Geoffrey S. Turner, "June 2014 Election Deadlines for Retroactive Application of New Foreign Affiliate Reorganization Rules", CCH International Tax, No. 74, February 2014, p. 1.

Retroactive election (p. 3)

… Bill C-48 permits taxpayers to electively apply Regulation 5901(2)(b) (together as a package with subsections...

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Geoffrey S. Turner, "New Foreign Affiliate Capital Distribution Elections: QROCs and Reg. 5901(2)(b) Dividends", CCH International Tax, No. 67, p. 1

From a group structure perspective, taxpayers may also wish to capitalize on the enhanced superiority of basis over surplus, by reorganizing...

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Geoffrey S. Turner, "Upending the Surplus Ordering Rules: Implications of the New Regulation 5901(2)(b) Election", CCH Tax Topics, No. 2079, p. 1, 12 January 2012

Taxpayers may now hold their foreign affiliate groups under a "basis and surplus mixer" foreign affiliate holding company, and routinely use the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(2) 0

Elaine Buzzell, "Distributions of Share Premium by Foreign Affiliates", Corporate Finance, Vol. XVII, No. 2, 2011, p. 1962

Includes comparison with previous comfort letter proposals.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(2) 25

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