Corporation A is a Canadian controlled private corporation and Corporation B is a public Canadian corporation.Both corporations have a paid-up capital balance of $25,000.Which of these statements is TRUE,provided the proper legal steps are followed?

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If the private corporation makes a payment of $25,000 to its shareholders by reducing its paid-up capital, there will be no tax consequence for the shareholders. This is because Canadian tax law provides that distributions made from the paid-up capital of a Canadian controlled private corporation are not taxable to the shareholders. However, proper legal steps must be followed to ensure that the distribution meets the requirements of the law. Option B and Option D are not true because the private corporation is the only one that can distribute from paid-up capital, and option C is not true because distributions from the paid-up capital of a public corporation are taxable.

Corporation a Is a Canadian Controlled Private Corporation and Corporation