/  79

(4)  The amount of after-tax cash available to pay dividends (including the dividend refund 

received as a result of the payment of the dividend) is sufficient to obtain a full refund of 

the RDTOH account in any of the provinces, with the exception of Nova Scotia, Prince 

Edward Island and Newfoundland.

 

 For example, if a corporation in Newfoundland and Labrador earns interest income and  

pays out all of its after-tax income (including its dividend refund) as a dividend, an amount 

equal to 1% of its income will remain in its RDTOH account, calculated as follows:

 

Amount available for distribution

 

 Corporate income 

$ 1,000

 

 Corporate tax 

     (487)

 

 After-tax amount 

 513

 

 Dividend refund 

     257

 

 Available for distribution 

$    770

 

RDTOH account 

 

 Refundable tax (26

2

/

3

% × $1,000) 

$ 267

 

 Dividend refund (33

1

/

3

% of $770 dividend) 

    (257)

 

 RDTOH balance 

$    10

Integration—Cost and Benefit of Incorporation  

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