About Refundable Dividend Tax on Hand (RDTOH) Balances

The RDTOH account only applies to corporations that are private or subject corporations. It is an accumulation of the refundable portion of Part I tax and Part IV tax payable, less any dividend refund received.

A Canadian-controlled private corporation (CCPC) generates RDTOH on both the Part I tax it pays on investment income, and on the Part IV tax it pays on dividends it receives. For any other type of private corporation, only the Part IV tax it pays generates RDTOH.

To calculate the RDTOH at the end of the tax year, add up the following amounts:

• the RDTOH balance at the end of the previous tax year (minus any dividend refund issued to the corporation in the previous year);
• the refundable portion of Part I tax from line 450;
• Part IV tax calculated on line 360 of Schedule 3; and
• any balance of RDTOH transferred from a predecessor corporation on amalgamation, or from a wound-up subsidiary corporation.

The RDTOH at the end of the tax year is from line 485 of the T2 Return corresponding to the tax year end.