Income Tax Act — I-3.3 186
Tax on assessable dividends 186 (1) Every corporation (in this section referred to as the “particular corporation”) that is at any time in a taxation year a private corporation or a subject corporation shall, on or before its balance-due day for the year, pay a tax under this Part for the year equal to the amount, if any, by which the total of (a) 38 1/3% of all assessable dividends received by the particular corporation in the year from corporations other than payer corporations connected with it, and (b) all amounts, each of which is an amount in respect of an assessable dividend received by the particular corporation in the year from a private corporation or a subject corporation that was a payer corporation connected with the particular corporation, equal to that proportion of the payer corporation’s dividend refund (within the meaning assigned by paragraph 129(1)(a)) for its taxation year in which it paid the dividend that (i) the amount of the dividend received by the particular corporation is of (ii) the total of all taxable dividends paid by the payer corporation in its taxation year in which it paid the dividend and at a time when it was a private corporation or a subject corporation exceeds 38 1/3% of the total of (c) such part of the particular corporation’s non-capital loss and farm loss for the year as it claims, and (d) such part of the particular corporation’s (i) non-capital loss for any of its 20 taxation years immediately preceding or 3 taxation years immediately following the year, and (ii) farm loss for any of its 20 taxation years immediately preceding or 3 taxation years immediately following the year as it claims, not exceeding the portion thereof that would have been deductible under section 111 in computing its taxable income for the year if subparagraph 111(3)(a)(ii) were read without reference to the words “the particular taxation year and” and if the corporation had sufficient income for the year. Reduction where Part IV.1 tax payable (1.1) Notwithstanding subsection 186(1), where an assessable dividend was received by a corporation in a taxation year and was included in an amount in respect of which tax under Part IV.1 was payable by the corporation for the year, the tax otherwise payable under this Part by the corporation for the year shall be reduced (a) where the assessable dividend is described in paragraph 186(1)(a), by 10% of the assessable dividend, and (b) where the assessable dividend is described in paragraph 186(1)(b), by 30% of the amount determined under that paragraph in respect of the assessable dividend. When corporation controlled (2) For the purposes of this Part, other than for the purpose of determining whether a corporation is a subject corporation, one corporation is controlled by another corporation if more than 50% of its issued share capital (having full voting rights under all circumstances) belongs to the other corporation, to persons with whom the other corporation does not deal at arm’s length, or to the other corporation and persons with whom the other corporation does not deal at arm’s length. Definitions (3) The definitions in this subsection apply in this Part. assessable dividend means an amount received by a corporation at a time when it is a private corporation or a subject corporation as, on account of, in lieu of payment of or in satisfaction of, a taxable dividend from a corporation, to the extent of the amount in respect of the dividend that is deductible under section 112, paragraph 113(1)(a), (a.1), (b) or (d) or subsection 113(2) in computing the recipient corporation’s taxable income for the year. ( dividende imposable déterminé ) subject corporation means a corporation (other than a private corporation) resident in Canada and controlled, whether because of a beneficial interest in one or more trusts or otherwise, by or for the benefit of an individual (other than a trust) or a related group of individuals (other than trusts). ( société assujettie ) Corpo