9.4 What are some significant differences for the treatment of Division ‘C’ deductions for individuals and corporations?

 Division ‘C’ Deductions

INDIVIDUALS

CORPORATIONS

Lifetime Capital Gain Deduction

• Capital gains deductions available is the lifetime maximum for the capital gains deduction, less any amounts that have been used in preceding years. ITA 110.6

Lifetime Capital Gain Deduction

N/A

Donations

• Individuals receive a credit for donations.
• ITA 118.1

Donations

• Corporations receive a deduction for a donation under Division ‘C’ rather than receiving a credit.
• Deduction cannot be greater than 75% of division B income
• Can be carried forward for 5 years.
• ITA 110.1(1)

Dividends

• Individuals receive a dividends credit for a gross up of 38% for eligible dividends and 15% for non-eligible dividends.
• ITA 82 and 121

Dividends

• From Canadian corporations and foreign affiliates – Division ‘C’ deduction (ITA 112), then dividends are taxed under Part IV of the ITA
• Other foreign dividends are included in Taxable income and taxed as Passive income.

Loss carryovers

• Net Capital Loss for individuals and corporations are carried forward indefinitely and carried back 3 years. ITA 111(1)
• Non-Capital Loss for individuals and corporation are carried forward 20 years and carried back 3 years. ITA 111(5.4)