Two kinds of taxable dividend
The CRA separates dividends from taxable Canadian corporations into eligible dividends and other than eligible dividends. The label does not change the cash you receive. It changes how much the recipient adds to income and how the dividend tax credit is worked out.
On a personal return, eligible dividends are reported on line 12000 and other than eligible dividends are reported on lines 12000 and 12010. The credit is then claimed as the federal dividend tax credit on line 40425, with a provincial amount calculated separately. Foreign dividends do not qualify for this credit.
How the gross-up works
Dividends are paid from after-tax corporate profit, so the personal tax system includes a gross-up and a credit to recognize tax the corporation has already paid. When you have no information slip, the CRA’s current guidance directs you to multiply the dividend actually received by 138% for an eligible dividend, or by 115% for an other than eligible dividend, and report the result.
Illustrative example: a shareholder receives $1,000 in eligible dividends. The taxable amount reported is $1,380. If the same $1,000 were an other than eligible dividend, the taxable amount would be $1,150. In practice the slip does the arithmetic for you, showing the actual amount, the taxable amount and the credit in separate boxes.
Designation is the corporation’s job
A corporation has to designate each eligible dividend it pays, before or when it pays it, and notify shareholders in writing. The CRA gives examples such as a letter to shareholders, a note on the dividend cheque stub or, where every shareholder is also a director, a notation in the minutes. A corporation may designate part of a dividend, or the whole amount, as eligible.
If a designation was missed, a late designation is possible only within limits: generally within three years, or in some situations six years, of when it was first required, and only where the minister considers it just and equitable. Do not treat that as a plan. Decide the designation when the dividend is declared and keep the record.
Questions for your accountant
Whether a particular dividend can be designated as eligible depends on the corporation’s own tax position, which this entry does not cover. Ask which part, if any, of a planned dividend can be eligible, how it will be documented and how it will appear on the T5 slip.
Dividends also pass through to the shareholder’s personal return, so raise the timing alongside salary and other income. Our salary versus dividends guide sets out the wider trade-offs, and the T5 slip entry explains how the dividend is reported.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Designation of eligible dividendsCanada Revenue Agency
- Lines 12000 and 12010 – Taxable amount of dividends (eligible and other than eligible) from taxable Canadian corporationsCanada Revenue Agency
- Federal dividend tax credit – Personal income tax (line 40425)Canada Revenue Agency
- T4015, T5 Guide – Return of Investment IncomeCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.