Section 55 2 Of Income Tax Act
In section 55 of the income tax act in sub section 2 after clause ab the following clause shall be inserted namely.
Section 55 2 of income tax act. However unless the dividend is a subsection 84 2 or 3 deemed dividend the dividend is re characterized to be a capital gain of the dividend recipient for the year in which the dividend was received. 1 for the purposes of 1 sections 48 and 49. 1 4 1988 b 3 cost of any improvement.
A 2 omitted by the taxation laws amendment and miscellaneous provisions act 1986 w. Ost of acquisition coa means any capital expense at the time of acquiring capital asset under transfer i e to include the purchase price expenses. Under new subsection 55 2 the dividend is also deemed not to be a dividend to the recipient corporation.
Meaning of adjusted cost of improvement and cost of acquisition. Subsection 55 2 of the income tax act canada is an anti avoidance provision intended to prevent capital gains stripping by deeming an inter corporate dividend to be proceeds of disposition or a capital gain if one of the purposes or if subsection 84 3 applies one of the results of the dividend is to effect a significant reduction of a capital gain attributable to anything other than safe income on hand. Amendment of section 55.
Section 55 in the income tax act 1995.