Reduction Of RDTOH When Dividend Refund Is Denied

Subsection 129(1) provides that if a private corporation files its tax return within three years after the end of the taxation year, the minister will refund the lesser of one-third of the taxable dividends paid by the corporation and the corporation's RDTOH. This dividend refund will be denied (that is, not credited to the taxpayer) if the tax return is not filed within this time limit; but, according to a CRA technical interpretation, the amount denied should still reduce the corporation's RDTOH account (2012-0436181E5, October 18, 2012). This CRA position has been called into doubt by two recent cases: Presidential MSH Corporation v. The Queen (2015 TCC 61) and Nanica Holdings Limited v. The Queen (2015 TCC 85).