Neal Armstrong makes note of a recent CRA technical (French only), which confirms that the CRA might not recognize an amount supposedly “paid” as a dividend if it is supported only by accounting journal entries. The well-established principle, per Hickman Motors, is that accounting entries merely reflect legally effective transactions. This principle is a powerful argument for a well-maintained minute book that includes directors’ resolutions declaring dividends and providing for their payment in cash, by way of a note, a set-off agreement, “or other document which represents and produces coin, and is treated as such by business men” (to quote Lord Brampton in Gresham Life Society Co. Ltd. v. Bishop, 1902 4 TCC 464 at 476).
