The Canada Revenue Agency (CRA) has published an Income Tax Folio on 15^th December 2016 regarding capital dividends (S3-F2-C1). The new Folio is open for comment up to 16^th March 2017. Additionally, a general overview of capital dividends and the capital dividend account (CDA) indicates:

• In accordance with Bill C-29, the reclassification of eligible capital property as depreciable property of a new Class 14.1 of Schedule II to the Regulations, which will be effective from 1^st January 2017. The non-taxable portion of capital gains recognized on the disposition of a capital property is incorporated to the corporation’s CDA.
• A change in paragraph (d) of the definition of CDA in subsection 89(1) of the Income Tax Act. The effect will be that the additional amount of a corporation’s CDA in respect of life insurance proceeds upon the death of a person on or after 22^nd March 2016 will be restricted to the amount by which the proceeds exceed the adjusted cost base of a policyholder’s interest in the policy, regardless of whether or not the specific company is the policyholder.
• an amendment to the explanation of CDA in subsection 89(1) of the Income Tax Act effective for trust distributions made on or after 16^th September 2016. The effect of the amendment is that the non-taxable share of a trust’s capital gains that are selected to be those of a corporate beneficiary, will, together with the non-taxable portion of any other capital gains of the corporation, be decreased by the non-allowable portion of the corporation’s realized capital losses.