Schedule 3 - Dividend

Tax Topics
1

Working on T2.

Corporation paid a dividend (non-eligible - the corporation earned under $500,000 of net income) to its sole shareholder.

Screenshot - Schedule 3:

Part 3

s3
s31650×967 353 KB

Part 4

s3 2
s3 21633×331 126 KB

Is the calculation in Part 4 correct ($0.00)? If so can someone please explain the logic?

2

Part IV Tax is only on dividends (and other passive incomes) earned. Not on the payments. However, if your corp had Part IV tax liability, then the dividends paid would automatically trigger (38.33%) reduction in Part IV tax.

Atul

1 Like
3

S3 Part 4 is applicable only if the dividends paid generate a dividend refund. Dividend refund comes from RDTOH - if there are no RDTOH balances (ERDTOH or NERDTOH), then S3 Part 4 should show all zeroes.

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4

@atul @Nezzer thank you very much for your helpful replies!