Is a dividend a transfer of property within the meaning of subsection 160(1) of the Corporations Act?
Canada (Federal), Canada
The following excerpt is from Neumann v. The Queen, 2009 TCC 81 (CanLII):
In Algoa Trust v. The Queen, [1993] 1 C.T.C. 2294, 93 D.T.C. 405, Rip, J., as he then was, found that a dividend was a transfer of property within the meaning of subsection 160(1). In doing so, he said: When a corporation pays a dividend to its shareholders the corporation gives or hands over property to its shareholders. Property is taken from the patrimony of a corporation and placed in the patrimony of a shareholder. When the dividend is declared, the corporation becomes indebted to the shareholder. When the dividend is paid, the corporation divests itself of ownership of the money (or other property) used to pay the dividend. This description is equally applicable to the payment of the dividends in this case. Property of 782 was taken from the patrimony of the corporation and placed in the patrimony of the Appellants; there was an impoverishment of the corporation and an enrichment of the Appellants.
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