Updated Checked by the Tax-Services.ca editorial team How we check
The Canada dividend tax credit exists so that dividends from Canadian corporations aren’t taxed twice. For 2026, eligible dividends are grossed up by 38% and you claim a federal credit of 6/11 of that gross-up, or about 15.02% of the taxable amount. On $10,000 of eligible dividends, that credit is roughly $2,073.
How does the gross-up work?
The tax return doesn’t start from the cash you received. It starts from a bigger number. For eligible dividends, the CRA tells you to multiply the amount received by 138%. For other than eligible dividends, you multiply by 115%. The bigger figure is what goes on line 12000 or 12010 of your return, and the credit is claimed against the tax on it.
Multiply the actual amount received by 138% and include the result on line 12000
Lines 12000 and 12010, Canada Revenue Agency, canada.ca
Why inflate the income, then hand back a credit? The idea is that the company has already paid tax on its profit before it pays you. The gross-up is meant to reflect that, and the credit cancels the double count. The CRA’s folio adds that the factors get adjusted when corporate rates change.
| Eligible dividends | Other than eligible | |
|---|---|---|
| Gross-up | 38% | 15% |
| Federal credit, as a fraction of the gross-up | 6/11 | 9/13 |
| Federal credit, as a share of the taxable amount | 15.0198% | 9.0301% |
| Taxable amount from $10,000 received | $13,800 | $11,500 |
| Federal credit on $10,000 received | $2,072.73 | $1,038.46 |
If you like to see the arithmetic: $10,000 grossed up by 38% adds $3,800, and 6/11 of $3,800 is $2,072.73. For the other kind, a 15% gross-up adds $1,500, and 9/13 of that is $1,038.46.
What does it mean in dollars on a real income?
Take an Ontario resident with $60,000 of other income who receives $10,000 in eligible dividends. Our dividend tax calculator shows $788.97 of extra tax. The same $10,000 paid as other than eligible dividends leaves an extra $2,027.86 to pay. It’s the same cash and the tax is about two and a half times bigger.
Now drop the other income to zero. The calculator shows no tax on the $10,000 of eligible dividends at all, because the credits wipe it out. That’s why retirees with small incomes like eligible dividends, and it’s a fair reason to look at where yours come from.
A caution about these numbers. The federal credit rates are on CRA material. The provincial credit rates in the calculator aren’t yet confirmed on official provincial pages, so treat the Ontario figures as an estimate and check your own return.
Which dividends are eligible?
The paying corporation designates them, and the CRA has a page on how it does that. You don’t get to pick. What you can do is read your slips.
On a T5 the taxable amount and the credit are printed for you. The CRA says your federal dividend tax credit is the total of the credit amounts on your slips (boxes 12 and 26 on a T5). Don’t work it out by hand unless a slip is missing. In that case you apply the 138% and 115% multipliers to what you received.
Picture Walt in Kelowna, retired, with a small pension and a handful of bank shares. Each January his T5 shows both the taxable amount and the credit already worked out. All he does is copy the boxes into his software.
Where the credit can catch you out
The gross-up raises the income on your return. A retiree who receives $12,000 of eligible dividends reports $16,560. Anything on your return that reads net income sees the bigger number, so check the rules of a benefit before you assume the cash amount is what counts.
We didn’t confirm on the pages we read how dividends inside registered plans are treated. Your slips are the guide, and the TFSA calculator and the RRSP withdrawal tax calculator help you compare where to hold money.
And what about selling shares? That’s a capital gain, with its own rules. The capital gains tax calculator covers it, using a 50% inclusion rate that we couldn’t find printed on a CRA page for 2026 (the proposed rise to two-thirds was cancelled in the Prime Minister’s release of 21 March 2025).
What should you do at tax time?
Gather every T5 before you start, including the ones from the small account you forgot about. Enter the slip boxes as printed and let your software or the form do the rest. If the credit on your return looks off compared with the slips, the usual cause is a missing slip or a typo in one box, not a rule you’ve misunderstood. A quick ballpark with the calculator above will tell you whether the final number is in the right neighbourhood.
How the numbers were checked
The gross-up multipliers come from the CRA’s instructions for lines 12000 and 12010. The 6/11 and 9/13 fractions come from the CRA’s Income Tax Folio S3-F2-C2, which shows the 38% and 15% gross-ups and warns that the factors get adjusted from time to time. The 15.0198% and 9.0301% figures are those fractions applied to the grossed-up amount. We read the pages on 30 September 2026, and we couldn’t confirm 2026-specific factors on a CRA page. This site isn’t linked with the CRA or any government body.
Frequently asked questions
What is the gross-up on eligible dividends?
38%. The CRA tells you to multiply the amount received by 138% when you have no slip.
What is the gross-up on other than eligible dividends?
15%, so you multiply what you received by 115%.
How big is the federal credit?
For eligible dividends it is 6/11 of the gross-up, about 15.02% of the taxable amount. For other dividends it is 9/13 of the gross-up, about 9.03%.
Where do I find my credit amount?
On your information slips. The CRA says the federal credit is the total of the credit amounts shown on them, for example T5 boxes 12 and 26.
Who decides whether a dividend is eligible?
The paying corporation designates it. Your T5 or other slip shows the taxable amount and the credit.
- RRSP, TFSA, FHSA and retirement income in Canada
How the RRSP, TFSA and FHSA differ, the 2026 limits, what happens when you withdraw, and where CPP and OAS fit into your retirement income