Eligible and Non-eligible Dividends

tax planning
Share on Facebook
Share on Twitter
Share on LinkedIn
Share on pinterest

Eligible dividends

An eligible dividend is any taxable dividend paid to a resident of Canada by a Canadian corporation that is designated by that corporation to be an eligible dividend. A corporation’s capacity to pay eligible dividends depends mostly on its status. In simple terms, eligible portion of dividend paid to shareholder from a profit in excess $500,000 as corporation pays higher taxes on that amount. You also received eligible dividend from public corporations resident in Canada.

Non-eligible dividends

Non-eligible dividends are the type of dividends that a Canadian corporations paid to their shareholders/owner. They represent the dividends that are paid out of the retained earnings of corporate profits; profits of which are taxed at the very favorable 13.5% on the first $500,000.

Eligible dividends has better tax treatment than non-eligible dividends.

Subscribe to our Newsletter

Stay up to date with our latest news and insights

Share this post with your friends

Nafees Chaudhry

Nafees Chaudhry

Nafees Chaudhry is the founder of CNC. Providing accounting, tax, and consulting services to small businesses and individuals for 23+ years.

All Posts