There are some exceptions to this rule which allows one party to secure the dividend as the profit or loss opportunity rests on another party. These are referred to as “dividend rental arrangements”. The banks claim this has led to the assessments being made.
The banks claimed that while these dividend rental arrangements were under the knowledge of the CRA, the problems started taking place in 2016 when the government stated that a taxpayer will make dividend-equivalent payments to the other party as well that can be taxed off from.
The banks also state that some of the reassessments being made are on transactions that are 20 years old. The Big Six have banded together and denied dividend deductions based on dividend rental arrangement, with a few of them being specific regarding the dividends in question.
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