As dividends are distributions of after-tax income by a corporation, to avoid double taxation, Canada has come up with a complicated approach to taxing Canadian dividends received by an individual. The individual must “gross-up” the dividend by the appropriate percentage (depending on the type of dividend) and then claim a “dividend tax credit” to offset the taxes on the extra income. These amounts are reported on the T3 and T5 slip issued to you; therefore, you do not need to do the calculations.
Why is the dividend amount reported on my personal tax return higher than the amount I actually received?
