During the year, Toad Co.paid $550,000 in preferred share dividends to Otter Co.Both companies are Canadian corporations.Which of the following is true?
A)Otter Co.is subject to Part VI.1 tax.
B)Toad Co.is subject to Part VI.1 tax.
C)Neither corporation is subject to Part VI.1 tax.
D)Both corporations are subject to Part VI.1 tax.

Question

Quizplus · Accepted Answer

Toad Co. is subject to Part VI.1 tax because this tax is levied on Canadian corporations that pay dividends on certain types of shares (typically preferred shares) to specified shareholders, which can include other corporations like Otter Co.

During the Year, Toad Co