Ontario Barrister and Solicitor Practice Exam

What is the corporate tax credit claimed by a Canadian taxpayer against their dividend income?

1. 15% of federal tax rate of 33%

2. 6/11 of federal tax rate of 33% and 10% of total taxable income for provincial rate.

3. 5% flat rate on all dividend income.

4. 8/11 of federal tax rate of 33%.

The correct answer is: 6/11 of federal tax rate of 33% and 10% of total taxable income for provincial rate.

A and D are incorrect because they do not accurately represent the corporate tax credit claimed by a Canadian taxpayer against their dividend income. A states that it is 15% of the federal tax rate of 33%, which is 4.95%. However, in reality, the credit is 6/11 of the federal tax rate (approximately 18.3%) and an additional 10% of the total taxable income for the provincial rate. D states that it is 8/11 of the federal tax rate, which is approximately 29%, but again, this is not the accurate calculation. C is also incorrect because it is a flat rate of 5% on all dividend income. The actual calculation involves a combination of different rates and percentages based on the federal and provincial tax rates. Therefore, the correct answer is B, which accurately represents the corporate tax credit claimed by a Canadian taxpayer against