Question #17 – Taxation

Of the following, who will report the highest amount of taxable income due to the receipt of a $10,000 dividend from the following sources?

  1. Glen who received a non-qualifying dividend from a private corporation
  2. Helen who received a qualifying dividend inside of her RSP
  3. Isabelle who received a capital dividend
  4. All will report the same amount of income

Solution: Glen received a non-qualifying dividend which means that it does not qualify for the higher dividend tax credit. On a Federal level only, he will need to gross up the $10,000 he received to $11,500. Helen received a qualifying dividend inside of her RSP which means that she does not have to report this as income. Had the amount been received in a non-registered account, it would have been grossed up to $13,800. Isabelle received a capital dividend which is not subject to tax. The correct answer is a.