What is RDTOH and why does my accountant track it for my Ontario corporation?

RDTOH stands for Refundable Dividend Tax on Hand, and it's a notional tax account the Income Tax Act requires a private corporation to track, reflecting a portion of the extra tax the corporation paid on certain income, mainly investment income, and some taxable dividends it received from other corporations, that isn't meant to be a permanent extra layer of tax. That extra tax gets refunded to the corporation later, but only once it actually pays out taxable dividends to its shareholders.

The reason your accountant tracks it closely is that the whole system is designed around "integration," making sure that income earned inside a corporation and eventually paid out to an individual shareholder ends up taxed roughly the same, overall, as if that person had earned the income directly. Without RDTOH, a corporation could otherwise be used to warehouse investment income at a lower combined rate than an individual would pay on the same income directly, which the tax system is specifically designed to prevent.

Because RDTOH only turns into an actual refund when dividends are paid, and because the account interacts with other corporate tax mechanics like GRIP, keeping accurate year-over-year tracking matters for making sure your corporation actually recovers the refund it's entitled to rather than leaving it sitting unused.