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Dividend Tax Credits for Canadian Dividends

Dividend Tax Credit for Canadian Eligible Dividends

Dividend Tax Credit for Non-Eligible Dividends

What Is The Dividend Tax Credit?

The dividend tax credit is a non-refundable tax credit which applies when Canadian dividends are included in income. Foreign dividends do not qualify for the dividend tax credit.

Both dividend tax credits are claimed on Line 40425 on the federal personal income tax return.

The dividend tax credit for dividends received after 2005 depends on the type of corporation paying the dividend. The two types of Canadian dividends are usually referred to as "eligible" or "non-eligible" dividends. Most dividends received from Canadian public corporations are considered "eligible dividends", while most dividends received from Canadian-controlled private corporations (CCPCs) are "non-eligible", or small business dividends.

A CCPC can pay eligible dividends if it has a balance in its General Rate Income Pool (GRIP). A GRIP balance is generated by income of the CCPC that has been taxed at the general corporate tax rate. See General rate income pool (GRIP) on the CRA website.

Dividend Tax Credit for Canadian Eligible Dividends

Eligible dividend tax credit - the basics, how the gross-up works

Table of Federal & Provincial/Territorial enhanced dividend tax credit rates

Why is there sometimes a negative marginal tax rate for dividends for lower income tax brackets?

Government benefits could be reduced by treatment of dividends after 2005.

Dividend Tax Credit for Non-Eligible Dividends

Dividend tax credit for non-eligible Canadian dividends

TaxTips.ca Resources

Comparison of taxes payable in each province on different levels of eligible dividends, non-eligible dividends, and interest income.

Comparison of taxes payable for seniors on Canadian eligible dividend income versus other income.

Alternative minimum tax as it relates to Canadian dividends, and how much can be earned in dividends before regular income taxes are payable.

Transfer dividend income to a spouse - In some circumstances, Canadian dividend income may be included in the income of either spouse.

Dividend tax credit rates for 2004 & 2005 - before the introduction of "eligible" and "non-eligible" dividends

Revised: October 29, 2024