Chapter 15 summary notes Summary of Chapter 15: Corporate distributions, Windups and Sales. Really useful to look through before the exam

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Retained earnings:
Capital dividend account non taxed portion of net capial gains
Undistributed surplus
Chapter 15: Corporate Distributions, Winding Ups and Sales
Paid up capital the amount which the corporation can return to the shareholder without it
being reported as a dividend to the shareholder
Definition 89(1)
PUC per share is an average of issue prices over time for a particular class
High-low shares shares with a lower PUC and high redemtion amount
PUC in a redemption of shares
Is computed at a corporate level
o ACB is computed at an individual shareholder level
Averaged among all shareholders of that clas based on shares held
When a share is disposed in SH perspective or redeemed in corporation perspective,
you must account for the deemed dividend that is subject to tax and is NOT part of
o Proceeds PUC = deemed dividend
o Proceeds deemed dividend = adjusted POD
o Then take the adjusted POD ACB = capital gain
Capital Dividend account completes integration of corporat and personal income tax on
capital gains, is to be distributed tax free to corportion share holders
Includes 5 components: 89(1)
o Add: Non-taxed portion of net capital gains (gains-losses) the OTHER half
of the tcg
o Add: Capital dividends received from another corporation
o Add: Non-taxable portion of the economic gain on disposition of eligible
capital property
o Add: Proceeds arising on death from certain life insurance policies received
by corporate net of cost basis of policies
o LESS: capital dividends paid
Private companies will have a nil balance on the first day they are a private company
o However: if the company was once public and then changes to private, it may
have a balance on the first day
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