BUSI 4005 Lecture Notes - Lecture 9: Life Insurance, Money Supply, Transaction Cost
24 May 2018
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Lecture 9
1. paid up capital
a. amount corporation can return to shareholder, not report as
dividend
b. contributed tax fund on initial investment of shareholder in
corporate share
c. disposition of share = ACB
d. PUC
i. At corporate level
ii. Based on capital contribution
iii. Average among all shareholder
iv. Withdrawn for free of deemed dividend
v. No tax consequence
e. ACB
i. At shareholder level
ii. Based on amount paid for share
iii. Unique to each one
iv. Disposition of share : CG
f. PUC effect on redemption of share
i. Deemed dividend = proceed – PUC
ii. CG/ CL = proceed – deemed dividend – ACB
2. capital dividend account
a. only private corporation
b. pay tax free dividend
c. untaxed portion of net CG (50%) + capital dividend reserve + net
gain not recognize on CECA – recapture + untaxed portion of
eligible capital property gain + untaxed life insurance proceed –
capital dividend paid = ending balance
d. use of corporate surplus balance
i. taxable dividend – treat as dividend paid in cash
ii. eligible dividend – exceed balance then 20% tax on
remainder
1. GRIP
2. Beginning + after tax earning + eligible tax dividend
received= end balance
3. Dividend
a. Type
i. Eligible - grip
ii. Ineligible= default
iii. Capital- tax free
b. Dividend paid
i. Cash
1. CDA
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