Précis: The taxpayer and her estranged spouse were shareholders and directors of Cove BD Inc. (Cove). They separated in the Fall of 2015. The taxpayer ceased to be a director and shareholder of Cove on October 2, 2016 (or, possibly, September 30, 2016). In February of 2017 her husband caused Cove to declare retroactive dividends of $50, 342 payable to the taxpayer in 2016 (representing a taxable amount of $58,900). CRA assessed her in respect of the alleged dividends and she appealed to the Tax Court.
The Tax Court Judge found that Cove could not legally pay dividends to the taxpayer in respect of the period of 2016 in which she was a director and shareholder without her concurrence, which she had not given. Accordingly the appeal was allowed. The parties were to bear their own costs.
Trower v. R. – TCC: Amounts of dividends paid without proper corporate authority not taxable in the hands of former director/shareholderREAD MORE »