Integration of Corporate and Personal Income Taxes
In Canada, corporate income is subject to corporate income tax and, on distribution as dividends to individuals, personal income tax. To avoid this "double taxation" of the same income, the personal income tax system, through the gross-up and dividend tax credit (DTC) mechanisms, provides recognition for corporate taxes, based notional federal-provincial corporate tax rates, to taxable individuals resident in Canada who receive dividends from Canadian corporations.
A dividend from a small business ("Canadian-controlled private corporation") is grossed-up by 25 per cent, meaning that the shareholder includes 125 per cent of the dividend amount in income, to reflect the pre-tax income of the small business out of which it has paid the dividend. This income is taxed at the shareholder's personal income tax rate, by a part of the tax is offset by a 13.3333% dividend tax credit (for 2010) to reflect the tax paid at the corporate level.
For dividends from other Canadian corporations, i.e., "eligible dividends", the gross-up is 45% and the dividend tax credit is 17.9739% (for 2010), reflecting the higher corporate income tax rate paid by larger corporations. Provincial and territorial governments also provide dividend tax credits to reflect provincial/territorial corporate income tax.
Read more about this topic: Income Taxes In Canada
Famous quotes containing the words integration of, integration, corporate, personal, income and/or taxes:
“The more specific idea of evolution now reached is—a change from an indefinite, incoherent homogeneity to a definite, coherent heterogeneity, accompanying the dissipation of motion and integration of matter.”
—Herbert Spencer (1820–1903)
“The more specific idea of evolution now reached is—a change from an indefinite, incoherent homogeneity to a definite, coherent heterogeneity, accompanying the dissipation of motion and integration of matter.”
—Herbert Spencer (1820–1903)
“Power, in Case’s world, meant corporate power. The zaibatsus, the multinationals ..., had ... attained a kind of immortality. You couldn’t kill a zaibatsu by assassinating a dozen key executives; there were others waiting to step up the ladder; assume the vacated position, access the vast banks of corporate memory.”
—William Gibson (b. 1948)
“I would rather have as my patron a host of anonymous citizens digging into their own pockets for the price of a book or a magazine than a small body of enlightened and responsible men administering public funds. I would rather chance my personal vision of truth striking home here and there in the chaos of publication that exists than attempt to filter it through a few sets of official, honorably public-spirited scruples.”
—John Updike (b. 1932)
“Work though we must, our jobs do not automatically determine our priorities concerning our marriages, our children, our social life, or even our health. It’s still life, constrained as it may be by limited disposable income or leisure time, and we’re still responsible for making it something we enjoy or endure.”
—Melinda M. Marshall (20th century)
“As I went about with my father when he collected taxes, I knew that when taxes were laid some one had to work to earn the money to pay them.”
—Calvin Coolidge (1872–1933)