RE: RE: RE: RE: Tried to figure out what's going oRight, but we are talking an additional amount of tax paid. Therefore there is a second tax paid on the dividend. The dividend tax credit does not equal the amount of tax the shareholder pays. The shareholder does not receive the dividend tax free, there is more tax paid once the shareholder receives the dividend. The reason the shareholder pays a small tax on the dividend as opposed to the normal tax rates on employment income or interest income, is because the corporation is paying the dividend out of after tax income.
The corporation has paid tax on the income it earned and is now paying out in a dividend and the shareholder pays additional tax on the dividend he/she receives. It's not double taxation (the total tax paid is supposed to be roughly the same as if it was employment income) but tax does get technically paid two times.
Cheers.