If a local Firm X owns 35% of the shares of a Canadian-owned Firm Y, and Y pays dividends to all of its shareholders, what percent of the dividends received by X can be exempted from its taxable income?

Question

Quizplus · Accepted Answer

In Canada, if a corporation owns at least 10% of the voting shares of another corporation, dividends received from that corporation are generally exempt from tax under the inter-corporate dividend deduction. Since Firm X owns 35% of Firm Y, it qualifies for this exemption, allowing 100% of the dividends to be exempt from taxable income.

If a Local Firm X Owns 35% of the Shares