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Line 40425. – Federal dividend tax credit. If you reported dividends on line 12000 of your return, claim on line 40425 of your return the total of the dividend tax credits from taxable Canadian corporations shown on your information slips. The dividend tax credit amounts are usually shown on a T5 slip, T4PS slip, T3 slip, and T5013 slip.
- Province Or Territory of Residence
The CRA needs this information to calculate your taxes and...
- T5 Slip
The dividend tax credit to which you are entitled is shown...
- T3 Slip
The federal dividend tax credit to which you are entitled is...
- T5013 Slip
The T5013 Information slip for the authorized member of a...
- Line 12000
Taxable amount of dividends if you did not receive an...
- Province Or Territory of Residence
- Dividend Tax Credit For Eligible & Non-Eligible Dividends
- Dividend Income and Gross-Up
- Calculating Dividend Income with Gross-Up
- How to Calculate The Federal Dividend Tax Credit?
- Why Do You Receive Dividend Tax Credit?
Corporations designate dividends as eligible or other than eligible. The difference is negligible to you, except for tax purposes. The type of dividends depends on the status of the corporation: Eligible Dividends: The corporation has to designate the dividends as “eligible” which means that they paid higher tax rates. In return, you will pay more ...
Your dividend income gets added to your taxable income. In addition to reporting the amount you earned in dividend income, you should account for a gross-up. Think of a gross-up as an increase to account for applicable taxes. For example, say your job pays $5,000 per week, but your salary is $5,500 per week because your employer wants $5,000 to be ...
Currently, the gross-up rate is 38% for the eligible dividends and 15% for the other than eligible dividends. As an example; If you received $200 worth of eligible dividends and $200 worth of other than eligible dividends, you would have to gross up your dividends by 38% and 15%, respectively. So, you would claim $506 as dividend income on your ret...
Since you pay taxes on the gross-up amount of the dividends, you are eligible to claim a credit to offset this gross-up. The Federal Dividend tax creditalso depends on the status of the dividends whether they are eligible or other than eligible. The most recent credit values are 15.0198% of the taxable eligible dividends amount and 9.0301% of the t...
The purpose of the federal dividend tax credit is to balance things out. You receive your share of the corporation’s earnings as a dividend. You report a gross-up to turn that income back into pretax income — because the corporation has already paid taxes on it — then, you receive a tax credit to make it fair for everyone. Both you and the corporat...
Multiply the taxable amount of eligible dividends you reported on your return by 15.0198%. Multiply the taxable amount you reported on your return by 9.0301%. Not applicable. Continuing the previous example, Brian’s dividend tax credit on the federal level would be: $414 x 0.150198 = 62.18. $230 x 0.090301 = 20.77.
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The dividend tax credit is a non-refundable tax credit which applies when Canadian dividends are included in income. Foreign dividends do not qualify for the dividend tax credit. Both dividend tax credits are claimed on Line 40425 on the federal personal income tax return. The dividend tax credit for dividends received after 2005 depends on the ...
Taxable amount of dividends if you did not receive an information slip. Eligible dividends. Other than eligible dividends. Multiply the actual amount you received by 138%. Multiply the actual amount you received by 115%. Include this amount on line 12000 of your return. Include this amount on line 12000 and line 12010 of your return.
Your dividend credit amount will show up on your T5, T4PS, T3, or T5013 slips. Multiply the taxable amount of your eligible dividends (Line 12000 on your tax return) by 15.0198% and your non-eligible dividends (Line 12010) by 9.0301%. This will tell you what the dividend tax credit is for the year.
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How do I calculate dividend tax credit?
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May 24, 2024 · Here’s how it is calculated: Gross-up: Eligible dividends are grossed up by 38%. For example, if you receive $100 in eligible dividends, the grossed-up amount is $138. Federal DTC: The federal credit is calculated as 15.0198% of the grossed-up amount. In our example, this would be $20.72 ($138 * 15.0198%).
