Dividend Refund of Connected Corporation

1

Re: Sch3, Col 260

I am working on a Holdco which received a dividend from Opco.

The dividend is $488k with generated NERDTOH of $171k. Holdco share of dividend refund $26k

Opco did not claim a dividend refund on their return.

Does Holdco have a requirement to pay their share of the dividend refund if it was not claimed by Opco? The Dividend Refund was generated but not claimed.

It seems logical to me that they would have to pay their share of the Dividend Refund as they would not have working knowledge of the timing of the Div Refund claim in the future and would have no way to report it in the future.

Its the wording in CRA T4012 that is confusing “to the extent that the payment of the dividends caused a dividend refund to the payer corporation”

image
image853×373 25 KB

From Corp Tax Guide T4012

  • Part IV taxes payable (amount Q) on:
    • eligible dividends received from non-connected corporations
    • taxable dividends received from connected corporations to the extent that the payment of the dividends caused a dividend refund to the payer corporation from its ERDTOH

I would appreciate your input.

2

From the limited information - related corporations ir not - but dividend was issued so taxes owing would be payable if indicated regardless of related or non related corp did not claim the benefit of claiming the declared dividend - so yes but I have limited info so take with grain of salt

Why would opco not claim the benefit ???

3

im confused…how can a dividend refund be generated but not claimed? I’m not aware of any mechanism that allows for that

4

I have requested that the post be taken down.

I was working with incorrect information from the client.

My apologies.

5

No worries - I was thinking something was off on it - happens a lot