noneligible dividend gross up and tax credit
Автор: Intermediate Financial Accounting I
Загружено: 2025-01-14
Просмотров: 203
The video discusses the topic of tax integration, specifically focusing on non-eligible dividends. It explains that a non-eligible dividend needs to be grossed up by 15% of the actual dividend amount for tax purposes.
Using an example involving an individual named Sam, it illustrates how Sam’s income is taxed differently depending on whether he earns it directly or through a corporation. If Sam earns $1,000 through his corporation, after accounting for the corporate tax of 13.43%, he is left with a non-eligible dividend of $869. For tax integration purposes, this is treated as if Sam earned $1,000 directly, necessitating a gross-up for taxation.
The video concludes by emphasizing that to avoid double taxation, the corporate tax paid should ideally be refunded to the individual through an non-eligible dividend tax credit.
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