Glossary
Eligible Dividend
An eligible dividend is one a corporation flags as paid out of profits that were taxed at the higher general corporate rate. Because that income already carried more tax inside the company, the shareholder receives an enhanced gross-up and dividend tax credit, which lowers the personal tax on the payout. Knowing which dividends qualify shapes how owner-managers choose to pay themselves. Our guide on salary versus dividends compares the routes and where eligible dividends fit.
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