Dividend Tax Credit

Canada may have a reputation as a place where moose outnumber people and the word "about" seems to refer to a kind of footwear. But the country does have some selling points. Curling. Anne of Green Gables-themed vacation destinations. And the dividend tax credit.

Under the rule, Canadian residents can reduce the taxes they owe from dividends they get from Canadian companies. So, you're Canadian (eh). You own shares of Mountie Hat Emporium Inc. MHE pays a quarterly dividend, meaning you get a cash payment for each share you own.

The dividend tax credit lowers the tax bill you owe on this, compared to the dividend you received from, say, your shares of U.S.-based American Bossy Eagle & Rifle Co. The dividend tax credit just gives a little boost to Canadian stocks...an effort on behalf of the Canadian government to entice its people to keep their money in the country.