• Non-Eligible (Small Business) Dividend Tax Credit (DTC)

    The gross-up and dividend tax credit are applicable to individuals, not corporations.

    Non-eligible dividends, also known as regular, ordinary, or small business dividends, are any dividends issued by a Canadian corporation, public or private, which are not eligible for the enhanced dividend tax credit.

    The non-eligible dividend tax credit rate is used for dividends received by individuals from Canadian-controlled private corporations (CCPCs), to the extent that their income is subject to tax at the small business rate.  A portion of dividends from large public corporations may also be classified as not being eligible for the enhanced dividend tax credit and would therefore be classified as non-eligible dividends.

    When an individual receives non-eligible dividends, the amount included in taxable income in 2016 and later years is 117% (for 2014 and 2015 it was 118%, 2013 and earlier years it was 125%) of the actual dividend.  The additional 17% is referred to as the gross-up.

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