ELECTION TO TREAT EXCESSIVE ELIGIBLE DIVIDEND AS AN ORDINARY DIVIDEND

In a May 13, 2016 Technical Interpretation (2016-0626371E5, Verlinden, Nicole), CRA opined that an election to treat an excessive eligible dividend designation (EEDD) as an ordinary dividend (Subsection 185.1(2)) must be made in respect of each eligible dividend paid in the year. In addition, the election only permits the corporation to elect up to the amount of the EEDD in respect of each eligible dividend paid. 

Currently, there is no prescribed form or manner for making this election. Therefore, administrative guidance is provided on the CRA website.

For further information see VTN Monthly Tax Update Seminar, Issue No. 419