Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether a taxpayer has the discretion to claim only a portion of the dividend tax credit?
Position: No.
Reasons: The use of the words “the total of” in section 121 of the Act supports the conclusion that an individual must claim all of the DTC available for a taxation year or none of the DTC available for the year.
XXXXXXXXXX
2012-043904
N. Pulandiran
October 4, 2012
Dear XXXXXXXXXX:
Re: Dividend Tax Credit
We are writing in response to your email of March 1, 2012, concerning the dividend tax credit (“DTC”) available under section 121 of the Income Tax Act (“Act”). More specifically, you have asked whether a taxpayer has the discretion to claim only a portion of the DTC available in determining his or her total taxes payable for the tax year.
Based on the wording of section 121 of the Act, it is clear that the DTC is a permissive deduction; however, the quantum of the DTC that may be claimed is not discretionary. When a taxpayer has discretion regarding the quantum of a permissive deduction, the Act provides specific wording to that effect. For example, in respect of capital cost allowance, paragraph 1100(1)(a) of the Income Tax Regulations contains the phrase “… such amount as the taxpayer may claim … not exceeding …” Section 121 does not contain similar wording. Because section 121 of the Act specifies that a taxpayer may deduct “the total of" the amounts, if any, computed under paragraphs (a) and (b), it is our view that an individual may either claim the entire DTC available or not claim the DTC at all.
We trust our comments will be of assistance to you.
Yours truly,
Nerill Thomas-Wilkinson
Manager
for Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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