The Ontario Dividend Tax Credit is a non refundable tax credit which provides personal income tax relief to Ontario investors in recognition that dividends from Canadian corporations are distributed from earnings that have already been taxed at the corporate level.
If you receive eligible dividends on or after January 1, 2006 from a Canadian corporation, you may claim an enhanced dividend tax credit to reduce the provincial portion of your income taxes.
See chart below for phase in dates:
| Taxation Year | Rate for Eligible Dividends (%) | Rate of Other Canadian Dividends (non-eligible) (%) |
|---|---|---|
| 2005 | 5.13 | 5.13 |
| 2006 | 6.5 | 5.13 |
| 2007 | 6.7 | 5.13 |
| 2008 | 7.0 | 5.13 |
| 2009 | 7.4 | 5.13 |
| 2010 | 6.4 | 4.5 |
| 2011 | 6.4 | 4.5 |
| 2012 | 6.4 | 4.5 |
What are eligible dividends?
Eligible dividends received from Canadian public corporations and other corporations resident in Canada that are subject to the general corporate tax rate may be eligible for the enhanced credit (for 2012: 6.4%). These amounts are usually reported in boxes 24, 25 and 26 on your T5 slip.
What are other Canadian dividends?
Other Canadian dividends are non-eligible dividends received from Canadian-controlled private corporations (CCPCs) subject to the small business rate which may be eligible for the lower rate (for 2012: 4.5%). These types of dividends are usually reported in boxes 10, 11 and 12 of your T5 slip.
How do I apply?
You have to calculate your credit on the provincial worksheet to determine the amount to enter on Form ON428 Ontario Tax included in your personal income tax return.
