Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2014-08-05 and last amended on 2014-06-27. Previous Versions

Marginal note:Tax on taxable dividends
  •  (1) Every taxable Canadian corporation shall pay a tax under this Part for each taxation year equal to the amount, if any, by which

    • (a) the total of

      • (i) the amount determined by multiplying the amount by which the total of all taxable dividends (other than excluded dividends) paid by the corporation in the year and after 1987 on short-term preferred shares exceeds the corporation’s dividend allowance for the year, by

        • (A) 50% for dividends paid in a taxation year that ends before 2010,

        • (B) 45% for dividends paid in a taxation year that ends after 2009 and before 2012,

        • (C) 40% for dividends paid in a taxation year that ends after 2011,

      • (ii) 40% of the amount, if any, by which the total of all taxable dividends (other than excluded dividends) paid by the corporation in the year and after 1987 on taxable preferred shares (other than short-term preferred shares) of all classes in respect of which an election under subsection 191.2(1) has been made exceeds the amount, if any, by which the corporation’s dividend allowance for the year exceeds the total of the dividends referred to in subparagraph 191.1(1)(a)(i),

      • (iii) 25% of the amount, if any, by which the total of all taxable dividends (other than excluded dividends) paid by the corporation in the year and after 1987 on taxable preferred shares (other than short-term preferred shares) of all classes in respect of which an election under subsection 191.2(1) has not been made exceeds the amount, if any, by which the corporation’s dividend allowance for the year exceeds the total of the dividends referred to in subparagraphs 191.1(1)(a)(i) and 191.1(1)(a)(ii), and

      • (iv) the total of all amounts each of which is an amount determined for the year in respect of the corporation under paragraph 191.3(1)(d)

    exceeds

    • (b) the total of all amounts each of which is an amount determined for the year in respect of the corporation under paragraph 191.3(1)(c).

  • Marginal note:Dividend allowance

    (2) For the purposes of this section, a taxable Canadian corporation’s “dividend allowance” for a taxation year is the amount, if any, by which

    • (a) $500,000

    exceeds

    • (b) the amount, if any, by which the total of taxable dividends (other than excluded dividends) paid by it on taxable preferred shares, or shares that would be taxable preferred shares if they were issued after June 18, 1987 and were not grandfathered shares, in the calendar year immediately preceding the calendar year in which the taxation year ended exceeds $1,000,000,

    unless the corporation is associated in the taxation year with one or more other taxable Canadian corporations, in which case, except as otherwise provided in this section, its dividend allowance for the year is nil.

  • Marginal note:Associated corporations

    (3) If all of the taxable Canadian corporations that are associated with each other in a taxation year and that have paid taxable dividends (other than excluded dividends) on taxable preferred shares in the year have filed with the Minister in prescribed form an agreement whereby, for the purposes of this section, they allocate an amount to one or more of them for the taxation year, and the amount so allocated or the total of the amounts so allocated, as the case may be, is equal to the total dividend allowance for the year of those corporations and all other taxable Canadian corporations with which each such corporation is associated in the year, the dividend allowance for the year for each of the corporations is the amount so allocated to it.

  • Marginal note:Total dividend allowance

    (4) For the purposes of this section, the “total dividend allowance” of a group of taxable Canadian corporations that are associated with each other in a taxation year is the amount, if any, by which

    • (a) $500,000

    exceeds

    • (b) the amount, if any, by which the total of taxable dividends (other than excluded dividends) paid by those corporations on taxable preferred shares, or shares that would be taxable preferred shares if they were issued after June 18, 1987 and were not grandfathered shares, in the calendar year immediately preceding the calendar year in which the taxation year ended exceeds $1,000,000.

  • Marginal note:Failure to file agreement

    (5) If any of the taxable Canadian corporations that are associated with each other in a taxation year and that have paid taxable dividends (other than excluded dividends) on taxable preferred shares in the year has failed to file with the Minister an agreement as contemplated by subsection 191.1(3) within 30 days after notice in writing by the Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax under this Part, the Minister shall, for the purpose of this section, allocate an amount to one or more of them for the taxation year, which amount or the total of which amounts, as the case may be, shall equal the total dividend allowance for the year for those corporations and all other taxable Canadian corporations with which each such corporation is associated in the year, and the dividend allowance for the year of each of the corporations is the amount so allocated to it.

  • Marginal note:Dividend allowance in short years

    (6) Notwithstanding any other provision of this section,

    • (a) where a corporation has a taxation year that is less than 51 weeks, its dividend allowance for the year is that proportion of its dividend allowance for the year determined without reference to this paragraph that the number of days in the year is of 365; and

    • (b) where a taxable Canadian corporation (in this paragraph referred to as the “first corporation”) has more than one taxation year ending in a calendar year and is associated in two or more of those taxation years with another taxable Canadian corporation that has a taxation year ending in that calendar year, the dividend allowance of the first corporation for each taxation year in which it is associated with the other corporation ending in that calendar year is, subject to the application of paragraph 191.1(6)(a), an amount equal to the amount that would be its dividend allowance for the first such taxation year if the allowance were determined without reference to paragraph 191.1(6)(a).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 191.1;
  • 2013, c. 34, s. 333.