Dividend Tax Credit

Dividend Tax Credit

In Canada, a tax credit that reduces one's tax liability if one receives dividends from a company. The credit is 13.33% of the value of a dividend for Canadian federal taxes, with additional credits at the provincial levels. The dividend tax credit treats a dividend as 125% of its actual value. For example, suppose one receives $1000 in dividends and would otherwise owe 22% (or $220) in taxes. The federal dividend tax credit would take 125% of the $1000 (or $1250) and reduces one's tax liability of 13.33% of that amount. 13.33% of $1250 is $166.63, which means that one would only owe $56.37 ($250 - $166.63) in taxes on the dividend at the federal level. One may owe less if the province applies its own dividend tax credit. This credit exists in order to avoid double taxation of dividends.
References in periodicals archive ?
Provided certain conditions are met, shareholders in receipt of A Share dividends may also be entitled to a non-payable dividend tax credit in the United Kingdom.
By removing the dividend tax credit and replacing it with a tax free dividend allowance of up to PS5,000, the Chancellor has created winners and losers.
Chancellor George Osborne said the Government will abolish the dividend tax credit from April 6 next year and introduce a new Dividend Tax Allowance of PS5,000 a year.
UKIP would also reduce the annual limit for tax relievable pension contributions to PS10,000 gross and reinstate the dividend tax credit at 20%.
To help make investors an offer they shouldn't refuse, the Government must enhance the credit rating of new projects, extend capital allowances to cover all types of infrastructure, ensure Solvency II doesn't act as a brake on growth and consider the introduction of a time-limited dividend tax credit for pension funds investing in new projects.
After two years of refusing to comply with The Freedom Of Information Act, Gordon Brown has finally been forced to release the information that he was warned by experts in 1997 that removing the dividend tax credit on occupational pensions would lead to thousands of workers, like former ASW staff, losing most or all their promised pensions.
Confidential advice released under the Freedom of Information Act showed the Chancellor was told the abolition of the dividend tax credit in 1997 could wipe out up to pounds 75 billion of pension fund assets.
A federal dividend tax credit of 2/3 of the gross-up (1/6 of the cash dividend, or 13.
A case in point is the recent Budget leak in the Financial Times which accurately claimed that Chancellor Gordon Brown would abolish dividend tax credit - not something in Labour's election manifesto.
Plans to abolish dividend tax credit enjoyed by pension funds and charities came under fire last night.
The long-term costs the Government will bear as a result of Britain's pension hole dwarfs the estimated pounds 5bn a year the Treasury raised by abolishing the dividend tax credit in 1997.
David Cameron stepped up the pressure on the Chancellor as the Tories called for an independent inquiry into the impact on pension funds of the 1997 abolition of dividend tax credit.