The Part I refundable tax procedures are designed to prevent deferral of taxes on income from investments that have been transferred to a corporation by an individual.

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The Part I refundable tax procedures were introduced to prevent taxpayers from avoiding or deferring tax on income from investments transferred to a corporation by an individual. The refundable tax rules require that a private corporation pay a higher rate of tax on passive income earned from investments and receive a refund of the excess tax paid when the corporation pays dividends to its shareholders. This ensures that shareholders are subject to tax on the passive income earned through the corporation.

The Part I Refundable Tax Procedures Are Designed to Prevent