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taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based)
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Canada Tax question: Suppose I received UK dividend $33,333.

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Canada Tax question: Suppose I received UK dividend $33,333. Dividend income $15,875 @ 10% + $17,458 @ 32.5% = $7,261.35. I paid UK tax $3,928.05 = $ 7,61.35 - $3,333.3 tax credit. Foreign dividends do not qualify for the dividend tax credit. Does it mean both amounts or just the 10% tax credit?
Submitted: 11 months ago.
Category: UK Tax
Expert:  Rachel-Mod replied 11 months ago.

Hello,

I'm Rachel, and I’m a moderator for this topic.

We have been working with the professionals to try to help you with your question. Sometimes it may take a bit of time to find the right fit.

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Customer: replied 11 months ago.

Hi Rachel,


I am waiting for an answer.


 


I want to know how to report my UK dividend on my Canadian tax return.


(1) Do I enter $30,000 or $33,333 as dividend income.


(2) How much foreign tax paid do I use to calculate my Federal and Provincial tax credit. $7,261.35 or $3,928.05.


 


Thank you.

Expert:  Rachel-Mod replied 11 months ago.

Hello,

Thank you, XXXXX XXXXX continue to look for a professional to assist you. Please let me know if I can be of any further assistance while you wait.

Best,

Rachel

Expert:  taxadvisor.uk replied 11 months ago.

Hello, if you have any questions or need further clarification after reading my answer please let me know.

Thank you for your question...

If you have received $33,333 as dividends, then the tax credit on this amount would be

$3,703.66 (being notional tax at 10%). The amount of dividend that you actually receive represents 90% of gross dividend after 10% notional tax. Calculation of gross dividend is (33,333x10/9).

If you were reporting this dividend when filing a UK tax return then your Dividend gross would be (33,333.00+3,703.66) $37,036.66 to calculate your overall tax payable and you will get a tax credit of $3,703.66 against your tax bill.

Based on above, you should use $3,703.66 as foreign tax paid.

If you need more information please let me know before you rate my service.

I hope this is helpful and answers your question. If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

I am available for any follow up questions you may have, and you can use the reply button to post your follow up questions to the page.

Expert:  taxadvisor.uk replied 11 months ago.

Hi there

I notice you have viewed my response to your original question on what you should show as foreign tax paid on dividends received from the UK (<span style="font-size: 9pt;"CustomerLast Viewed on 8/21/2013 at 4:47 PM).

Just checking to see if you have any issues relating to your question that I may not have addressed. Please let me know if I can be of further assistance.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

Customer: replied 11 months ago.

I don't think you know Canada Tax. You got everything wrong.


 


I received UK dividend $30,000 cash + 10% tax credit ($3,333.33). I also paid UK tax on dividend $3,703.66 cash.


 


I want to know how to file my Canada tax: Do I report $30,000 or $33,333 as foreign dividend income? What foreign tax paid do I report? $3,703.66 or $3,333 + $3,703.66?

Expert:  taxadvisor.uk replied 11 months ago.

Dividends received from UK companies carry a notional tax of 10%.

You have received $30,000 in dividends with a dividend tax credit of $3,333 making your dividend income $33,333 carrying a tax credit of $3,333.

Line 121 of your tax return requires you to report any foreign dividends you have actually received. You should report $30,000 as amount received.

Foreign dividends do not qualify for the dividend tax credit.

If you paid foreign taxes on your interest or dividend income, you may be able to claim a foreign tax credit when you calculate your federal (see line 405) and provincial or territorial taxes (Form 428). So you should report $3,703.66 as foreign tax paid.

If you need more information please let me know before you rate my service.

I hope this is helpful and answers your question. If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

I am available for any follow up questions you may have, and you can use the reply button to post your follow up questions to the page.

taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
Satisfied Customers: 3586
Experience: FCCA - over 35 years experience as a qualified accountant (UK based)
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