Dividend income

A Canadian corporation pays dividends from profits it has already paid corporate tax on. To account for this, you report a larger "grossed-up" amount, then claim a dividend tax credit.

The gross-up increases your net income even though you did not receive that cash. This can affect income-tested benefits, including the OAS recovery tax.

Dividends from foreign companies do not qualify for this treatment. They are taxed like interest and reported in Canadian dollars.