A portion of dividends paid by public corporations will sometimes be not eligible for the enhanced dividend tax credit.
With the enhanced dividend tax credit, a "gross-up" is added to the actual dividend to determine the taxable dividend amount to include in income. The tax credit is calculated as a portion of the gross-up. See the tables below for gross-up and Federal tax credit percentages. See the tables of enhanced dividend tax credit rates for the provincial and territorial rates.
In keeping with the previously announced reductions to the federal corporate income tax rates, the 2008 Federal Budget reduced the gross-up on dividends eligible for the enhanced dividend tax credit, and reduced the dividend tax credit rate, beginning in the 2010 tax year. The dividend tax credit factor of 11/18ths of the gross-up was changed to
What does this do to the marginal tax rates for eligible dividends?
The tax bracket thresholds are indexed each year. For all marginal tax rates and thresholds for the current year, federally and for each province and territory, see the Tables of Marginal Tax Rates.
See also our article which shows the maximum amount of dividends that can be received before any tax is payable.
Revised: December 19, 2013
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