Tax slips typically have 3 cells linked to a dividend entry. In this case, on the T5 slip you are using, you have Box 24, 25, and 26. As a tax preparer, you enter Box 24.
- Box 25 is 38% of Box 24 and will auto populate. This is the Taxable Amount of the Dividend and is added to Line 12000 on the T1 Jacket.
- Box 26 is 15.0198% of Box 25. This is the Dividend Tax Credit related to this dividend. Rather than showing this box on the T5 slip tab in the tax software, the software places the amount directly on Line 40425 (just below the federal tax calculations on the non-refundable tax credit page). The credit is also calculated on the Provincial xx428 schedule under the tax calculation section (in Manitoba, it is on Line 61520).
Hope this helps. Now you know where to look to check that the dividend tax credit is being applied.
Of note: If the individual has low income and is paying no tax, the Dividend Tax Credit will have no benefit.
