The Refundable Dividend Tax On Hand (RDTOH) balance at the end of the year includes the refundable Part I tax for the current year, the refundable Part IV tax for the current year, the corporation's RDTOH balance at the end of the preceding year, with this total reduced by the corporation's dividend refund for the preceding year.

Question

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This statement correctly describes how the RDTOH balance is calculated at the end of the year. The RDTOH balance reflects the amount of refundable taxes a corporation has paid that can be refunded when the corporation pays eligible dividends to its shareholders. The balance includes both Part I and Part IV taxes for the current year, as well as any RDTOH balance carried forward from the previous year, but it is reduced by the amount of dividend refund claimed in the previous year.

The Refundable Dividend Tax on Hand (RDTOH) Balance at the End