For eligible dividends, perfect integration requires that the provincial dividend tax credit be equal to 5/11 of the dividend gross. If the provincial credit is larger than this, the use of a corporation will be less attractive.

Question

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If the provincial credit is larger than 5/11 of the dividend gross, the use of a corporation will actually be more attractive because the excess credit can be used to reduce the corporation's tax liability.

For Eligible Dividends, Perfect Integration Requires That the Provincial Dividend