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How are Dividends Taxed in Canada?

Updated: Oct 28


When you receive a dividend, which is a regular payment of profit made to investors who own a company's stock, it can be in two forms:

- Ineligible Dividend - this type of dividend is from a company that has paid tax at a lower small business rate. You receive a markup (1.15) and you also get a tax credit on the marked-up amount

- Eligible Dividend - this type of dividend is from a company that has paid tax at a higher corporate general rate. You receive a markup (1.38) and you also get a tax credit on the marked-up amount

Eligible dividends are preferable as they generally result in less tax to be paid by the taxpayer

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