The tax incentive used to motivate Canadian investors to purchase shares of taxable Canadian companies. The dividend tax credit is calculated by applying a formula that "grosses up" dividend income by adding 25% to the amount of dividends actually received. A tax credit is then applied to the federal tax due on that amount. The result is reduced taxes owing on the dividend income.

Tax credit accorded to individuals receiving corporate dividends. Its purpose is to compensate for the fact that corporate earnings are taxed in the hands of the corporation and possibly again in the hands of the shareholder.

Tax procedure for reducing the effective tax rate on dividends from Canadian companies.