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Dividend Tax Credit

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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.


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Anthony Platts, director of investment manager Brewin Dolphin's Teesside office, urged the new Government to prioritise an overhaul of the pensions system and reinstate dividend tax credits abolished from pension funds in 1997.
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.
An eligible dividend received by a Canadian resident individual shareholder is entitled to the enhanced dividend tax credit.
 
 
 
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