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kerryss
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.

1 Reply
TurboTax-Duncan
Level 6

Retained Earnings when marking up eligible dividends from T3

Hi, thank you for using TurboTax Live Community

Eligible dividend gross up from actual dividends does not apply to corporations. Because of this corporations only record the actual amount of dividends, not eligible dividends. Usually a trust(T3) would only report eligible dividends to a payee who is either individuals or Trust.

Corporations are not able to claim a dividend tax credit either. This is mentioned on page 51 of the T3 guide:

https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4013/t4013-19e.pdf

Hope this helps

 

v