Income Tax Act — I-3.3 131
Election re capital gains dividend 131 (1) Where at any particular time a dividend became payable by a corporation, that was throughout the taxation year in which the dividend became payable a mutual fund corporation, to shareholders of any class of its capital stock, if the corporation so elects in respect of the full amount of the dividend in prescribed manner and at or before the earlier of the particular time and the first day on which any part of the dividend was paid, (a) the dividend shall be deemed to be a capital gains dividend payable out of the corporation’s capital gains dividend account to the extent that it does not exceed the corporation’s capital gains dividend account atthe particular time; and (b) notwithstanding any other provision of this Act (other than paragraph (5.1)(b)), if an amount is received by a taxpayer in a taxation year as, on account of, in lieu of payment of or in satisfaction of, the dividend, the amount (i) shall not be included in computing the taxpayer’s income for the year as income from a share of the capital stock of the corporation, and (ii) is deemed to be a capital gain of the taxpayer from the disposition of capital property in the year. Deemed date of election (1.1) Where at any particular time a dividend has become payable by a mutual fund corporation to shareholders of any class of shares of its capital stock and subsection 131(1) would have applied to the dividend except that the election referred to in that subsection was not made on or before the day on or before which the election was required by that subsection to be made, the election shall be deemed to have been made at the particular time or on the first day on which any part of the dividend was paid, whichever is the earlier, if (a) the election is thereafter made in prescribed manner and prescribed form; (b) an estimate of the penalty in respect of the election is paid by the corporation when the election is made; and (c) the directors or other person or persons legally entitled to administer the affairs of the corporation have, before the time the election is made, authorized the election to be made. Request to make election (1.2) The Minister may at any time, by written request served personally or by registered mail, request that an election referred to in paragraph 131(1.1)(a) be made by a mutual fund corporation and where the mutual fund corporation on which such a request is served does not comply therewith within 90 days after service of the request, subsection 131(1.1) does not apply to such an election made thereafter by it. Penalty (1.3) For the purposes of this section, the penalty in respect of an election referred to in paragraph 131(1.1)(b) is an amount equal to the lesser of (a) 1% per annum of the amount of the dividend referred to in the election for each month or part of a month during the period commencing with the time that the dividend became payable, or the first day on which any part of the dividend was paid if that day is earlier, and ending with the day on which the election was made, and (b) the product obtained when $500 is multiplied by the proportion that the number of months or parts of months during the period referred to in paragraph 131(1.3)(a) bears to 12. Assessment and payment of penalty (1.4) The Minister shall, with all due dispatch, examine each election referred to in paragraph 131(1.1)(a), assess the penalty payable and send a notice of assessment to the mutual fund corporation and the corporation shall pay forthwith to the Receiver General, the amount, if any, by which the penalty so assessed exceeds the total of all amounts previously paid on account of that penalty. (1.5) to (1.9) [Repealed, 2013, c. 34, s. 277] Capital gains refund to mutual fund corporation (2) Where a corporation was, throughout a taxation year, a mutual fund corporation and a return of its income for the year has been made within 3 years from the end of the year, the Minister (a) may, on sending the notice