Line 716 - Part IV.1 tax payable
Line 716 - Part IV.1 tax payable
Complete Schedule 43, Calculation of Parts IV.1 and VI.1 Taxes, to calculate Part IV.1 tax payable.
Part 4 of Schedule 43 - Calculation of Part IV.1 tax payable
Part 4 gives details on how to calculate Part IV.1 tax.
Public corporations and certain other corporations may be subject to the 10% Part IV.1 tax on dividends they receive on taxable preferred shares. A restricted financial institution is also subject to tax on dividends received on taxable restricted financial institution shares (see subsection 248(1) for definitions of these terms).
The issuer of taxable preferred shares can elect to pay a 40% rather than a 25% tax under Part VI.1 on dividends on taxable preferred shares when they complete Part 3 of this schedule. This election exempts the holder of these shares from the 10% tax under Part IV.1. No other form needs to be filed to elect. For details, see Line 724 on page 97.
Excepted dividends, which are defined in section 187.1, are not subject to Part IV.1 tax. For example, an excepted dividend is one the corporation receives on a share of another corporation in which the corporation had a substantial interest at the time it received the dividend.
Part 4 of the schedule also allows the calculation of Part IV tax reduction when there is Part IV.1 tax payable on the same dividend.
The Part IV tax reduction is equal to:
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10% of the dividend, if the dividend is received from a non-connected corporation
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30% of the Part IV tax payable, if the dividend is received from a connected corporation
On line 716, enter the amount of Part IV.1 tax payable that you calculated on line 340 of Schedule 43.
References
Sections 187.1 to 187.6
Subsections 186(1.1) and 191.2(1)
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