Enhanced Dividend Tax Credit for Dividends from Large Corporations
The government will proceed with measures announced by the previous government on November 23, 2005 to provide an enhanced dividend tax credit for dividends from large corporations paid after 2005.
Dividends eligible for the new credit will be grossed up by 45% (meaning that 145% would be included in income) and receive a credit equal to 11/18 of the gross-up against federal tax otherwise payable.
In general, the new credit will only apply to dividends received from public corporations that are resident in Canada and subject to the general corporate income tax rate. However, Canadian-controlled private corporations will also be able to pay eligible dividends to the extent that their income (other than investment income) is subject to tax at the general corporate income tax rate.
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