Question: It is now February 28, 2021. Cindy and Matt are married with two children, Lucas and Sarah. In 2020, Lucas turned 16 years old on April 18th, 2020 and Sarah turned 17 years old on September 20th, 2020. Until March 2020, Matt was the owner of 100 shares of BCA Ltd. (“BCA”), a public company. BCA. had a great last couple of years of strong performance, so in

It is now February 28, 2021. Cindy and Matt are married with two children, Lucas and Sarah.

In 2020, Lucas turned 16 years old on April 18th, 2020 and Sarah turned 17 years old on September 20th, 2020.
Until March 2020, Matt was the owner of 100 shares of BCA Ltd. (“BCA”), a public company. BCA. had a great last couple of years of strong performance, so in March 2020 he gifted 50% of his BCA. shares to Cindy for her 50th birthday. At that time, Matts BCA.’s shares were worth $1,500,000 in total ($15,000 per share). Matts's total adjusted cost base (“ACB”) at the time of the gift was $100 ($1 per share). In each of June 2020 and April 2021, BCA. declared and paid a $50,000 eligible dividend.

Cindy owns a portfolio of investments. In July 2020, she decided to sell her 10,000 shares of Arm Co., a public corporation, to Lucas and Sarah for cash proceeds that they inherited from their grandmother. At the time, of the sale, Arm Co. was valued at $5.00 a share. Cindy's ACB in the Arm Co. shares was $4.00 a share. The transaction details of the sale by Cindy to Lucas and Sarah are as follows:
No. of Shares Sold Total Cash Proceeds
Sale to Sarah 6,000 $28,000
Sale to Lucas 4,000 $20,000
Total 10,000 $48,000

In December 2020, Arm Co. paid a dividend of $1.00 per share, as it does every year.

In September 2020, Matt transferred to Cindy 5,000 shares of Glasgow Inc., a public corporation, which was worth $500,000 total. At the time of the transfer, Al’s ACB of the shares was $250,000. To pay for the transaction, Cindy issued an interest-bearing promissory note in favour of Matt in the amount of $500,000 as consideration for the Glasgow Inc. shares. The shares did not pay any dividends while Cindy owned the shares. She sold the shares in February 2021 for $600,000. She forgot to pay Matt the 1% interest owing on the promissory note for 2020.

Unfortunately, in January 2021, Cindy and Matt decided to separate and signed a separation agreement.

With all the transactions that occurred in 2020, Cindy and Matt are getting confused as to who owns what asset and who needs to report the dividend income and capital gains triggered in the 2020 year for each respective asset. Cindy and Matt would also like to know how they should report the various transfers that took place in 2020, and the assets’ ACB for the transferee/recipient. They would like this information ahead of time so there are no surprises come April 2021 when they have to file their 2020 tax returns. Furthermore, in anticipation of finalizing their divorce sometime later in 2021, they would like to know the tax implications for 2021. You can assume that the couple will be divorced sometime in the fall of 2021 and that they want to minimize tax and make any necessary elections.