In 2016-0658351E5 (recently released), the CRA observed that the new rules in s. 55 applicable to low-PUC stock dividends and safe income do not apply when such stock dividends are issued to individuals.  Rather, the new rules are relevant only when the recipient of the low-PUC stock dividend is a corporation resident in Canada (see page 5 and the definition of “dividend recipient” in s. 55(2.1)).  The new rules effectively stream and convert safe income – that contributes to a gain on existing shares – into tax cost base on shares issued as a stock dividend (see page 6, s. 55(2.3)(b), and s. 52(3)(a)(ii)).  In contrast, where a stock dividend is issued to an individual, the CRA’s prior administrative position continues to apply: safe income contributing to a gain on the existing shares is apportioned between those shares and the stock dividend shares, based on their respective accrued gains determined after payment of the stock dividend (see page 7, s. 52(3)(a)(i), and paragraph (c) of the definition of “amount” in s. 248(1)).