An eligible dividend is any taxable dividend paid to a resident of Canada by a Canadian corporation that is designated by that corporation to be an eligible dividend. A corporation's capacity to pay eligible dividends depends mostly on its status.
For tax years that begin after 2018, the dividend refund rule is changed so that a private corporation gets a refund of its refundable dividend tax on hand (RDTOH) only where it pays non-eligible dividends, or eligible dividends that are derived from portfolio dividends it received from non‑connected corporations. A transitional rule will preserve the refundability of a corporation's pre‑existing RDTOH.
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