When amounts distributed to shareholders on cancellation or repurchase of shares fall below specified thresholds, the amounts are taxable in full to shareholders as dividends. When distributions on repurchases exceed those thresholds, or occur through the stock exchange, the distributions will be deducted from available subscribed capital of the company and will be tax-free to the shareholders. However, this is only to the extent that the distributions are not in lieu of dividends. If the subscribed capital of the company has been depleted, the distributions will be taxable.
Specific rules also govern the repurchase and subsequent sale of Treasury stock.
The total value entered on the return should be the aggregate value of all distributions made by the company during the year for company shares repurchased, redeemed, cancelled or purchased as Treasury stock.