Capital Dividend Account (CDA)

In the context of Canadian corporate taxation, a "Capital Dividend Account (CDA)" is a notional account maintained by private corporations to track non-taxable portions of capital gains and certain other tax-free receipts. The purpose of the CDA is to allow corporations to distribute these amounts to their shareholders as tax-free capital dividends.

Key aspects of a Capital Dividend Account (CDA) include:

  • Non-Taxable Distributions: Allows for tax-free dividend payments to shareholders.
  • Tracking: Records non-taxable portions of capital gains and other specified receipts.
  • Private Corporations: Applicable to Canadian-controlled private corporations (CCPCs).

The CDA provides a mechanism for shareholders to benefit from tax-free distributions of certain corporate earnings.

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