Canada Foreign-denominated income from a local company

Joined
Jul 1, 2022
Messages
5
Reaction score
0
Country
Canada
Suppose a company domiciled locally and whose shares I own distributes income to its shareholders in a foreign currency, i.e. USD. Should I treat this as local or foreign dividend income for accounting purposes as a shareholder?
 

DrStrangeLove

VIP Member
Joined
May 27, 2022
Messages
163
Reaction score
27
Country
United States
Suppose a company domiciled locally and whose shares I own distributes income to its shareholders in a foreign currency, i.e. USD. Should I treat this as local or foreign dividend income for accounting purposes as a shareholder?
Just to make sure I understand the situation: The company is domiciled in (I'm assuming) Canada. You own shares in it, and you're a Canadian taxpayer. The company is paying out a dividend in USD rather than in CAD.

I don't see the argument as to how it could be foreign dividend income. The form of the dividend isn't what makes it foreign or domestic (not local) dividend income. It's the domicile of the company paying the dividend and the domicile of the recipient that decide whether the dividend is domestic or foreign, I think. The form would only change the reported value of the dividend.

If the corporation paid a dividend with gold or silver bars, or with tangible property, that would still be domestic income to you, since you and the company are both Canadians, right? Paying out a dividend to a Canadian taxpayer would be domestic (read: from Canada) income regardless of form, I think.

I'm not 100% certain. I'd suggest you contact CRA for a reliably authoritative answer.
 
Joined
Jul 1, 2022
Messages
5
Reaction score
0
Country
Canada
@DrStrangeLove Thanks for your response. What you described above is precisely the scenario. Your take on it makes sense. It is what I had defaulted to though I could only substantiate it by saying it did not sound like the income came from a foreign source. In due course, I will see how the income is disclosed on the tax certificates, but the question was more for accounting disclosure purposes rather than for tax.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top