Dividends from Canada

Dividends from Canada Image

There are two types of dividends-”eligible dividends” and “other than eligible dividends”, that you may receive from taxable Canadian corporations with different gross-up factors and calculations for the corresponding dividend tax credits.

  • “Eligible dividends” (generally those received from corporations on the stock exchanges) are grossed-up by 38% and a federal dividend tax credit is allowed which is calculated as 6/11 of the gross-up (or 15.0198% of the grossed-up dividends).

 

  • For example, $100 “eligible dividend” received will be grossed up to $138 taxable dividend and the dividend tax credit will be $20.73.
  • Dividends “other than eligible dividends” (usually from owner-managed small corporations) are grossed-up by 15% and a federal dividend tax credit is allowed which is calculated as 9/13 of the gross-up (or 9.0301% of the grossed-up dividends).
  • For example, $100 “other than eligible dividend” received will be grossed up to $115 taxable dividend and the dividend tax credit will be $10.38.  The “eligible dividend” is less taxing.

 

 

The above information is of a general nature only and should not be relied upon for specific situations.  Call Marlies Y Hendricks, CPA at 416-766-3941 to discuss your best options and set up an appointment.

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