Dividend Tax Credit

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 425 on Schedule 1 of the federal personal income tax return.

The dividend tax credit for dividends received after 2005 depends on the type of corporation paying the dividend.  Most dividends received from Canadian public corporations are eligible for the enhanced dividend tax credit (eligible dividends), while most dividends received from Canadian-controlled private corporations (CCPCs) are eligible for the regular, or small business dividend tax credit.  The two types of Canadian dividends are usually referred to as “eligible” or “non-eligible” dividends.

For more information visit the Tax Tips website