When It Is Unlawful to Declare Dividends Because of a Deficiency

question 7

Multiple Choice

When it is unlawful to declare dividends because of a deficiency in the capital fund and yet the shareholders want a quick pay-out,then

• A)Revenue Canada can issue "not withstanding" tax credits.
• B)the corporation needs to earn enough profits to restore the deficiency.
• C)shareholders can lend money to the corporation and receive interest payments in return.
• D)the corporation can re-capitalize at a lower amount.
• E)wages can be paid to officers instead of dividends.

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