CRA indicated that 943963 Ontario had essentially confirmed its position in 9711005, which stated:
[W]hen a corporation receives a dividend, part of which is attributable to safe income on hand and part subject to tax under Part IV of the Act, it is not possible to treat the part attributable to safe income on hand as not subject to Part IV tax. Any dividend paid by the payer corporation is considered to be paid first out of the safe income on hand attributable to the recipient corporation's shares of the payer corporation. Where a particular corporation is subject to Part IV tax because a payer corporation is connected with the recipient corporation and the payer corporation receives a dividend refund as a result of the payment of the taxable dividend, by virtue of paragraph 186(1)(b), the Part IV tax will be attributable to the first part of the dividend which is equal to 4 times the dividend refund receivable by the payer corporation. Therefore, the portion of the dividend received by the recipient corporation that would be subject to tax under Part IV of the Act would also include any safe income attributable to the shares of the payer corporation held by the recipient corporation.