This document has been updated on October 24th, 2017 and reflects the state of the Law, including draft amendments, at that date.

Dividend Income

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
Paying corporation
  • Public company
  • Other company from income not eligible for SBD (other than investment income)
  • CCPC from income eligible for SBD or from investment income

The 2017 gross-up and credit rates are shown in the  Schedule – Individuals Taxation for your province at the end of the Tax Planning Guide.

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).