Glossary
Refundable Dividend Tax on Hand (RDTOH)
Refundable dividend tax on hand is a tracking account that records refundable tax a corporation prepays on its investment income, such as interest and certain dividends. The company gets that tax back as a refund when it later pays taxable dividends to shareholders. The mechanism keeps the overall tax on investment income earned through a corporation close to what an individual would pay directly, a principle called tax integration. It feeds straight into how owners weigh salary against dividends.
Related reading