In 2014-0528361E5, the CRA responded to a query in respect of previous Rulings document 2012-0439741I7 which had indicated that the premium on redemption of certain foreign affiliate shares (mandatory redeemable preference shares) would be characterized as a dividend.

The CRA acknowledged that Rulings document 2012-0439741I7 does not reflect the views of the CRA and that in the absence of an election under subsection 93(1) of the Income Tax Act, proceeds from the redemption of foreign affiliate shares are treated as proceeds of disposition.