Section 7 – Investments
The grossed-up amount of dividends received from Canadian corporations is taxable. However, taxpayers are entitled to a tax credit on the taxable amount of the dividend. A distinction has been made between two types of dividends paid by Canadian corporations.
|Eligible dividend||Other dividend|
The gross-up and credit rates are shown in the Schedule – Individuals Taxation for your province.
Consider acquiring preferred shares of public companies on which dividends are payable in order to reduce the overall income taxes on your portfolio.
Spouse’s Dividend Income
If a taxpayer who has little income tax to pay cannot claim the dividend tax credit, the spouse may elect, for federal purposes to include the dividends in her/his own tax return and claim the related dividend tax credit.
This election is possible only if it enables the taxpayer to claim or increase the claim for the spousal amount.
In Quebec, the inter-spousal transfer of the unused portion of the non-refundable tax credits produces a similar result (see Section II).
This document is up to date as of August 1, 2019 and reflects the status of legislation, including proposed amendments at this date.