Re:Companies Use Borrowed Billions to Buy Back Stock, Not to...
by Scoundreller on Sunday August 11, 2019 @05:07PM
(#20670522)
Right, but this means, for Canadians, dividends paid by non-Canadian corps are taxed as regular income. Stocks to do buybacks instead of dividends are more valuable to us.
Not in Canada:
> Unlike many other countries, dividends from Canadian based companies are eligible for a somewhat convoluted set of calculations that can fondly be described as the dividend gross up and tax credit system. The basic rationale behind this system is that dividends are paid by corporations after the taxman has already taken his cut. Therefore, if dividend payments were fully taxed in the hands of the investor as well, it would equate to a double taxation.
* https://www.fool.ca/13-steps-to-financial-freedom/step-8-the...
* https://www.investopedia.com/terms/d/dividendtaxcredit.asp
It's slightly convoluted, but if you have investments in taxable accounts, then there's a bit of advantage in them than simply interest. Though capital gains in Canada is only taxed at half of one's marginal rate as well.