Returning Member

Retained Earnings when marking up eligible dividends from T3

My company receives a T3 slip with eligible dividends (box 49 example $1000), which you are supposed to mark up by 38%, or box 23 by 15%. This marked up value is then entered into code 8095 (Dividend Income) of Schedule 125 example $1380.

This all calculates into a net income/loss on S125 (code 9999), which then is brought over to Schedule 100 Net income/loss (code 3680). This results is the retained earnings being artificially inflated by the above 38%.

Schedule 3 has Part IV tax entries (F 240 and G 242 each also $1380 in this example), which helps adjust the dividend refund, but the result is the Assets are up by the extra 38% on div income, and the total retained earnings are also up the same amount.

How do I adjust for this so that the retained earnings from year to year are correct? Or is the marked up $380 in this example part of my actual retained earnings? I assume it is only for taxation reasons and not an indication of what is currently in the company.

Thank you in advance.