Principal Issues: 1. What would be the tax results from the application of subsection 55(2) in the examples provided considering the filing of an original return and of an amended return?
2. According to our position, an original return should be sent that includes the Part IV tax payable and the dividend refund to be received. After that filing, an amended return should be filed to compute taxes considering the application of subsection 55(2). The question is whether the amended return should be sent before or after the issuance of the original assessment.
3. Considering the fact that a corporation has to file an original return and an amended return reflecting the consequences of the application of subsection 55(2), is it possible to avoid interest on the higher amount of tax computed in the amended return?
Position: 1. Considering the assumptions given, the dividend refund and Part I and Part IV taxes, see the different results in the letter.
2. The important thing when filing the original return is that it shows that Part IV tax will be paid and the dividend refund will be received with respect to the dividend paid in the same series. However, there is no provision in the Act indicating when an amended return should be filed. Filing the amended return after the filing of the first assessment may be preferable administratively to avoid confusion.
Reasons: 1. The results would be based on the fact that the portion of the dividend subject to tax under Part IV that is not refunded as a consequence of the payment of a dividend by a corporation in the same series is equal to the amount of Part IV tax computed less the dividend refund, which amount is divided by 0.383333.
2. No legislative provision and administrative process.
3. The corporation could pay the higher amount of tax computed in the amended return at the balance-due date to be applied in the particular taxation year as an advance deposit prepaying the reassessment.