Dividends from foreign corporations are taxed at the taxpayer's marginal tax rate because they are

treated as regular income in Canada. Unlike Canadian dividends, which may qualify for a dividend tax

credit to reduce the effective tax rate, foreign dividends do not receive preferential tax treatment

under Canadian tax law.

Marginal Tax Rate: The rate at which the taxpayer’s last dollar of income is taxed. Since foreign

dividends do not qualify for tax credits, they are taxed as ordinary income.

Double Taxation Relief: While foreign dividends are fully taxable in Canada, tax treaties between

Canada and other countries may allow a foreign tax credit to offset taxes paid to the foreign

jurisdiction. However, this does not alter their treatment under the marginal tax rate.

Other options provided in the

question:

Dividends not eligible for the dividend tax credit (Option C) are usually taxed at a higher rate, but

Canadian non-eligible dividends receive some preferential treatment, unlike foreign dividends.

Foreign property valuation (Options B and D) is relevant for reporting requirements under Canadian

tax laws, such as the T1135 Foreign Income Verification Statement, but does not affect the taxation

of foreign dividends.

Reference:

CSC Volume 2, Chapter 24: "Canadian Taxation," details the treatment of foreign income, including

dividends and foreign tax credits​.