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How do I calculate the dividend tax credit?



Our response:

We are not able to provide investment advice. Speak to a registered financial advisor or accountant to calculate the credit for your investments. Generally, for eligible dividends:

  1. Add up your eligible dividends. These include most dividends from Canadian public companies and certain dividends from private companies.
  2. Multiply by 1.38. This number is your grossed-up dividends. (The amount added to the actual dividends is called the dividend gross up.)
  3. Add your grossed-up dividends to your income for the year.
  4. Calculate the tax on that grossed-up amount.
  5. Claim a federal dividend tax credit of approximately 15% of the grossed-up dividends.
  6. Claim a provincial tax credit based on where you live.

The Canada Revenue Agency (CRA) has more information on the taxable amount of dividends, both eligible and dividends other than eligible.

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