Lines 440, 445, and 450

Lines 440, 445, and 450

The refundable portion of Part I tax is part of the non-eligible refundable dividend tax on hand (NERDTOH). More information about NERDTOH is in the section that follows.

The refundable portion of Part I tax allows a CCPC that has paid Part I tax on investment income to recover part of that tax when the corporation pays taxable dividends to its shareholders. The refundable portion of Part I tax only applies to corporations that are CCPCs throughout the tax year.

The refundable portion of Part I tax is based on the aggregate investment income and foreign investment income. You have to determine these amounts by completing Parts 1 and 3 of Schedule 7, Aggregate Investment Income and Income Eligible for the Small Business Deduction.

Part 1 - Aggregate investment income calculation

The aggregate investment income is the aggregate world source income calculated as follows:

add

• the eligible portion of the taxable capital gains for the year that is more than the total of:

  • the eligible portion of allowable capital losses for the year

  • the net capital losses from previous years which are applied in the year

• total income from property (including income from a specified investment business carried on in Canada other than income from a source outside Canada) from which the following amounts have been deducted:

  • exempt income

  • AgriInvest receipts (include the Quebec amount)

  • taxable dividends deductible after deducting related expenses

  • business income from an interest in a trust that is considered property income under paragraph 108(5)(a)

deduct

• total losses for the year from property (including losses from a specified investment business carried on in Canada other than losses from a source outside Canada)

On line 440 enter the amount of aggregate investment income that you determined on line 092 of Schedule 7.

You can include taxable capital gains and allowable capital losses in a CCPC's net investment income only if you can attribute the gain or loss to a period of time when a CCPC, an investment corporation, a mortgage investment corporation, or a mutual fund corporation held the disposed property.

Part 3 - Foreign investment income calculation

The foreign investment income is all income from only sources outside of Canada calculated as follows:

add

• the eligible portion of the taxable capital gains for the year that is more than the eligible portion of allowable capital losses for the year

• the total income from property from a source outside Canada from which the following amounts have been deducted:

  • exempt income

  • taxable dividends deductible after deducting related expenses

  • business income from an interest in a trust that is considered property income under paragraph 108(5)(a)

deduct

• the total losses for the year from property from a source outside Canada

On line 445 enter the amount of foreign investment income that you determined on line 079 of Schedule 7.

Calculate the amount of the refundable portion of Part I tax. For years starting after 2018, enter the amount from line 450 at amount H in the "Refundable dividend tax on hand" area on page 7 of your return.

References
Subsection 129(4)
IT-73, The Small Business Deduction
IT-269, Part IV Tax on Taxable Dividends Received by a Private Corporation or a
Subject Corporation

Refundable dividend tax on hand

The calculation of a private corporation's dividend refund is based on two accounts, the eligible refundable dividend tax on hand (ERDTOH) and the non-eligible refundable dividend tax on hand (NERDTOH).

For more information on eligible dividends, go to canada.ca/taxes-eligible-dividends or see page 94.

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