Income Tax Act — I-3.3 191.1
Tax on taxable dividends 191.1 (1) Every taxable Canadian corporation shall pay a tax under this Part for each taxation year equal to the amount, if any, by which (a) the total of (i) the amount determined by multiplying the amount by which the total of all taxable dividends (other than excluded dividends) paid by the corporation in the year and after 1987 on short-term preferred shares exceeds the corporation’s dividend allowance for the year, by (A) 50% for dividends paid in a taxation year that ends before 2010, (B) 45% for dividends paid in a taxation year that ends after 2009 and before 2012, (C) 40% for dividends paid in a taxation year that ends after 2011, (ii) 40% of the amount, if any, by which the total of all taxable dividends (other than excluded dividends) paid by the corporation in the year and after 1987 on taxable preferred shares (other than short-term preferred shares) of all classes in respect of which an election under subsection 191.2(1) has been made exceeds the amount, if any, by which the corporation’s dividend allowance for the year exceeds the total of the dividends referred to in subparagraph 191.1(1)(a)(i), (iii) 25% of the amount, if any, by which the total of all taxable dividends (other than excluded dividends) paid by the corporation in the year and after 1987 on taxable preferred shares (other than short-term preferred shares) of all classes in respect of which an election under subsection 191.2(1) has not been made exceeds the amount, if any, by which the corporation’s dividend allowance for the year exceeds the total of the dividends referred to in subparagraphs 191.1(1)(a)(i) and 191.1(1)(a)(ii), and (iv) the total of all amounts each of which is an amount determined for the year in respect of the corporation under paragraph 191.3(1)(d) exceeds (b) the total of all amounts each of which is an amount determined for the year in respect of the corporation under paragraph 191.3(1)(c). Dividend allowance (2) For the purposes of this section, a taxable Canadian corporation’s dividend allowance for a taxation year is the amount, if any, by which (a) $500,000 exceeds (b) the amount, if any, by which the total of taxable dividends (other than excluded dividends) paid by it on taxable preferred shares, or shares that would be taxable preferred shares if they were issued after June 18, 1987 and were not grandfathered shares, in the calendar year immediately preceding the calendar year in which the taxation year ended exceeds $1,000,000, unless the corporation is associated in the taxation year with one or more other taxable Canadian corporations, in which case, except as otherwise provided in this section, its dividend allowance for the year is nil. Associated corporations (3) If all of the taxable Canadian corporations that are associated with each other in a taxation year and that have paid taxable dividends (other than excluded dividends) on taxable preferred shares in the year have filed with the Minister in prescribed form an agreement whereby, for the purposes of this section, they allocate an amount to one or more of them for the taxation year, and the amount so allocated or the total of the amounts so allocated, as the case may be, is equal to the total dividend allowance for the year of those corporations and all other taxable Canadian corporations with which each such corporation is associated in the year, the dividend allowance for the year for each of the corporations is the amount so allocated to it. Total dividend allowance (4) For the purposes of this section, the total dividend allowance of a group of taxable Canadian corporations that are associated with each other in a taxation year is the amount, if any, by which (a) $500,000 exceeds (b) the amount, if any, by which the total of taxable dividends (other than excluded dividends) paid by those corporations on taxable preferred shares, or shares that would be taxable preferred shares if they were issued after June 18, 1987 and were not