Income Tax Act — I-3.3 129
Dividend refund to private corporation 129 (1) Where a return of a corporation’s income under this Part for a taxation year is made within 3 years after the end of the year, the Minister (a) may, on sending the notice of assessment for the year, refund without application an amount (in this Act referred to as its “dividend refund” for the year) in respect of taxable dividends paid by the corporation on shares of its capital stock in the year, and at a time when it was a private corporation, equal to the total of (i) in respect of eligible dividends, an amount equal to the lesser of (A) 38 1/3% of the total of all eligible dividends paid by it in the year, and (B) its eligible refundable dividend tax on hand at the end of the year, and (ii) in respect of taxable dividends (other than eligible dividends), an amount equal to the total of (A) the lesser of (I) 38 1/3% of the total of all taxable dividends (other than eligible dividends) paid by it in the year, and (II) its non-eligible refundable dividend tax on hand at the end of the year, and (B) either (I) if the amount determined under subclause (A)(I) exceeds the amount determined under subclause (A)(II), the lesser of 1 the amount of the excess, and 2 the amount by which the corporation’s eligible refundable dividend tax on hand at the end of the year exceeds the amount, if any, determined under subparagraph (i) for the year, and (II) in any other case, nil; and (b) shall, with all due dispatch, make the dividend refund after sending the notice of assessment if an application for it has been made in writing by the corporation within the period within which the Minister would be allowed (i) under subsection 152(4) to assess tax payable under this Part by the corporation for the year if that subsection were read without reference to paragraph 152(4)(a), or (ii) under subsection 152(4.31) to assess tax payable under Part IV by the corporation for the year if the Minister has assessed the corporation’s tax payable under that Part for the year under subsection 152(4.31). Dividends paid to bankrupt controlling corporation (1.1) In determining the dividend refund for a taxation year ending after 1977 of a particular corporation, no amount may be included under clause (1)(a)(i)(A), subclause (1)(a)(ii)(A)(I) or sub-subclause (1)(a)(ii)(B)(I)1 in respect of a taxable dividend paid to a shareholder that (a) was a corporation that controlled (within the meaning assigned by subsection 186(2)) the particular corporation at the time the dividend was paid; and (b) was a bankrupt at any time during that taxation year of the particular corporation. Dividends deemed not to be taxable dividends (1.2) Where a dividend is paid on a share of the capital stock of a corporation and the share (or another share for which the share was substituted) was acquired by its holder in a transaction or as part of a series of transactions one of the main purposes of which was to enable the corporation to obtain a dividend refund, the dividend shall, for the purpose of subsection 129(1), be deemed not to be a taxable dividend. Application to other liability (2) Instead of making a refund that might otherwise be made under subsection 129(1), the Minister may, where the corporation is liable or about to become liable to make any payment under this Act, apply the amount that would otherwise be refundable to that other liability and notify the corporation of that action. Interest on dividend refund (2.1) Where a dividend refund for a taxation year is paid to, or applied to a liability of, a corporation, the Minister shall pay or apply interest on the refund at the prescribed rate for the period beginning on the day that is the later of (a) the day that is 120 days after the end of the year, and (b) the day that is 30 days after the day on which the corporation’s return of income under this Part for the year was filed under section 150, unless the return was filed on or before the day on or before which it was requi