When shares are redeemed, the gain consists of two components: a capital gain and a deemed dividend. The deemed dividend per share is calculated as the difference between the Redemption Price per share and the Paid Up Capital (PUC) per share. This deemed dividend may be tax-free when WUTIF applies some of its Capital Dividend Account (CDA) to the redeemed shares. This is done by filing an election with the Canada Revenue Agency (CRA). In this case, there would be no T5 issued.
WUTIF can, from time to time, transfer some of its Capital Dividend Account (CDA) to investors, eliminating the deemed dividend (and tax thereon) entirely! The deemed dividend becomes a capital dividend.
For example, in 2026 investor X redeemed her shares for $28.80 per share. Her cost was $19.50 per share (this is the average price she paid for her shares, not counting the tax credit received). The $28.80 redemption price consists of a PUC/share of $21.95 and a deemed dividend of $6.85 per share.
In this case, the deemed dividend is $6.85 and the capital gain is $2.45 per share. The investor pays no tax on the deemed dividend (because WUTIF filed with CRA) but would pay regular capital gains tax on the capital gain of $2.45 per share. (For additional clarity, the deemed dividend and the capital gain = $6.85 + $2.45 = $9.30 which is the same as her net profit of $28.80 – $19.50 = $9.30.)
The investor in the above example would only pay cap gains tax on $2.45. (At the 53.5% marginal rate (in B.C.) and 50% inclusion, the tax would be $0.655.) Corporate investors would receive an increase to their CDA account.
To make your calculation, you do not need to know the PUC/share. All you need to know is the deemed dividend. Then, calculate your total gain (e.g. Redemption Price minus Cost) and subtract the deemed dividend to get your capital gain.
NOTE: The above commentary is for illustration purposes only. Please consult with your tax advisor and do not rely on this information.