Ask Allan Forum
Get expert answers to your tax questions straight from Allan, our owner and experienced CPA. It’s free, direct, and designed to help you make the best decisions when it comes to your taxes.
So this company is investment company ! It has invested in 2 companies ! In first one it has 12% shares and in second one it has 50% shares ( class B common shares ) . It has received actual amount of dividends other than eligible dividends from both the companies ! What are the tax implications and what expenses can be claimed ?
I am assuming that all of the companies involved are Canadian corporations. In this case, your investment company can claim a tax deduction under section 112 of the Canadian income tax act for the dividends received. To do so, complete Schedule 3 of the T2 corporate tax return. In addition, if your investment company owns more than 10% of the voting shares and 10% of the value of all shares in the capital stock of the corporation, then Part 4 tax (38.33%) will not apply. In other words, your investment company will not have to pay tax on the dividends received.