Which of the following statements best describes the purpose of the dividend tax credit?

Question

Quizplus · Accepted Answer

The purpose of the dividend tax credit is to counteract double taxation on investors. This is because dividends are paid out of after-tax profits, so without the tax credit, investors would be paying tax on the same income twice - once at the corporate level and again at the personal level. The tax credit reduces the amount of tax that investors have to pay on their dividend income, making it more attractive to invest in dividend-paying stocks.

Which of the Following Statements Best Describes the Purpose of the Dividend