Opco pays a dividend to Holdco, and part of the dividend is re-characterized as a capital gain under subsection 55(2). Does that affect the amount of the dividend reported on the T5 for the dividend? I have not been able to find any authority on point, but a colleague has pointed out that subsection 55(2) affects the character of the dividend from the point of view of the recipient and not the payor. The subsection does not change the fact that Opco paid a dividend. Moreover, the obligation to issue a T5 for the amount of the dividend is imposed on Opco, and so it would seem that the T5 should report the dividend paid regardless of the amount of the dividend received. In the same vein, my colleague referred to technical interpretation 2013-0480051E5, in which the CRA took the position that the portion of a GRIP dividend in excess of safe income depletes the GRIP of the payor in the full amount of the dividend but augments the recipient’s GRIP account only to the extent of the safe income.
