Nancy received a $160 taxable dividend from Can-Star Ltd., whose shares she holds in her non-registered account. Can-Star is a taxable Canadian corporation. What is the approximate amount of the dividend tax credit Nancy will receive on the shares?
Eligible Canadian dividends are grossed up by 38% and then receive a federal dividend tax credit of 15.02% of the taxable amount.
For Nancy’s $160 dividend:
Grossed-up amount = $160 × 1.38 = $220.80
Federal dividend tax credit = 15.02% × $220.80 = $33.15
Thus, Nancy will receive a dividend tax credit of approximately $33.
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