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Allan CPA
Level 1

dividend paid to connnected corporations S3

From my understanding, dividend paid to connected corporation should should entered into box 430. this amount subject to S.112 deduction and no part IV tax for HoldCo. For SubCo company, dividend paid to connected corporation should not be included in the taxable dividends paid (line 460). the amount should be excluded from calculating dividend refund. Should we override line 460 mannually to remove amount paid to connected corporation?

1 Comment 1
janisbossenberry
Level 6

dividend paid to connnected corporations S3

A dividend paid to a connected corp still qualifies for a dividend refund if there is Refundable Dividend Tax On Hand.  It is the connected corp that receives the dividend that does not have to remit the Part IV tax.  The system basically works on the premise that the Part IV tax gets paid and gets refunded at every level, until a connected corp receives it.  Your Sch 3 looks correct to me.