I received a dividend that wasn’t from a related company, but from a public corporation it invested in. Will my company need to pay tax on it?
Probably. In contrast to distributions between related companies, where private Canadian companies receive “portfolio dividends” (i.e. from unconnected companies) from Canadian companies, they do pay tax on the receipt. However, they do not technically include these amounts in income, but rather pay a special type of tax that is refunded to them when they pay dividends. This is intended to prevent them from using the deduction for dividends received to defer income tax.
I received dividends from a non-Canadian company; will I need to pay tax on this?
This deduction is not generally available where the company receives dividends from foreign companies, although there are narrow exceptions when the company operates in Canada.
Are dividends received that relate to all types of shares eligible for the deduction?
No. While dividends received as a result of ownership of the basic shares typically issued by small businesses allow corporate holders to claim this deduction, there are exceptions that function as anti-avoidance rules.
