Inclusions Flashcards
1
Q
What is the formula for the
Federal Dividend Tax Credit
A
Dividends from
(i) active business income of a CCPC taxed at low corporate rate; or
investment income of a CCPC:
- gross-up rate is 25%
- 16.67% of dividends paid; or
- 2/3 x 25% (gross-up) = 16/67% of dividends paid; or
- 13 1/3% x 125% (grossed-up dividend) = 16.67% of dividends paid.
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(ii) income from a public corporation resident in Canada taxed at the general corporate rate; or
business income of CCPC resident in Canada taxed at general corporate rate (not the low corporate rate) :
- gross-up rate is 38%
- 20.7% of the dividends paid; or
- 6/11 x 38% (gross-up) = 20.7% of dividends paid; or
- 15% (rounded) x 138% (grossed-up dividends) = 20.7% of the dividends paid
2
Q
Conditions for dividend gross-up and tax credit procedure
A
- individual shareholders receive the dividend (corporate shareholders discussed in later modules); and
- dividends are received from Canadian resident corporations (dividends received from non-resident corporations are fully taxed).
3
Q
Distinguish between
Taxable dividends and dividends
A
- Taxable dividends are dividends received from resident corporations.
- Dividends are dividends received from non-resident corporations
