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Why is the dividend tax credit the full gross up amount?Problem 1 Victor is...

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Accounting

Why is the dividend tax credit the full gross up amount?Problem 1
Victor is confused, so he has come to you for advice. He has heard that not all dividends are treated
the same, so he would like you to explain how the following are taxed to decide where he should invest
his money. Victor has income that will result in the income below being taxed in the highest tax bracket,
which has a combined federal and provincial marginal tax rate of 53% for the province he lives in.
Assume the following:
(1) $1,000 of dividends from Canadian public companies.
(2) $1,000 of dividends from Canadian private companies earning active business income taxed at
a low rate.
(3) $900 of dividends from foreign public companies. $100 was deducted at source and remitted to
the foreign government.
(4) The provincial dividend tax credit is 413 for Canadian private company dividends earning active
business income taxed at the low rate and 511 for public company dividends.
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