Geoff, no, dividends are not now and will not be taxed in a tax exempt account in 2011. The difference in 2011 will be that the gross payments from a trust will be reduced by 31% (the then tax on dividends in the trust's hands before distribution), and the tax exempt account will not be able to use the dividend tax credit to get that deducted amount back. If, on the other hand, the 2011 dividend was to be paid to an ordinarily taxable individual's account, he would be able to claim the dividend tax credit when he files his tax return. Eventually, then, a taxable entity will get the full 2011 payment as part of his taxable income (so avoiding double taxation, since the tax will have already been paid by the trust).
Since the full amount will be treated as taxable income when it is (eventually) withdrawn from the RRIF, the 2011 dividend from a trust to a non-taxable account will be taxed twice, once in the hands of the trust at 31%, and later at the taxpayer's marginal rate on withdrawal (probably in the 45% to 50% range, depending on his Province of residence, in Canada at least).
Clear as mud?!
Tony. |
