Refundable dividend tax on hand (RDTOH)

Question 1

Refundable dividend tax on hand (RDTOH)

Answer 1

For tax years beginning on or after January 1, 2019, there are two types of RDTOH balances:
* Non-eligible RDTOH: Includes refundable taxes on investment income and Part IV tax on non-eligible portfolio dividends.
o Only the payment of a non-eligible dividend can trigger a refund from this account.
* Eligible RDTOH: This tracks refundable taxes paid on eligible dividends received by the corporation.
o Any type of dividend (either eligible or non-eligible) can trigger a refund out of this account; however, when non-eligible dividends are paid, the refund must come out of non-eligible RDTOH first.
At the date of transition, the eligible RDTOH balance will be calculated as the lesser of:
* The existing RDTOH balance; and
* 38 1/3 % of the General Rate Income Pool (GRIP) balance.

Reference: ITA 123.3, 129(4), 186