Eligible dividends are not subject to Part IV tax. Part IV of the income tax act states that the special tax is meant to limit access to the corporation's lower tax rate on income. It clearly shows where the tax applies and where it does not. When Part IV tax applies to a situation, the tax equal to 38% is payable on the amount of assessable dividend received on a particular year. The actual provision is very complex and there are a number of carve-outs and definitions that can affect the outcome