Donald Cherniawsky, in “Are Dividend Refund Claims by Dividend-Paying Corporations Elective?” 17:4 Tax for the Owner-Manager (October 2017), refers to CRA technical interpretation 2016-0649841E5. The TI states that a dividend payer could elect not to claim a dividend refund in a taxation year. This would be helpful in a butterfly where the dreaded circularity problem might otherwise arise. Mr Cherniawsky notes, however, that there are practical problems to the approach, not the least of which is CRA audit hostility to the “election” and T2 software, which won’t allow overriding the dividend refund claim.
