Yet a deemed dividend is still a dividend. In other words, a deemed dividend qualifies for the tax treatment that would otherwise apply to a conventional dividend. For example, a deemed dividend to an individual shareholder qualifies for the dividend tax credit.

What are deemed dividends?

Section 84 – Deemed dividends

property is distributed to shareholders when a corporation's business is wound-up, discontinued, or reorganized. any of the company's own shares are redeemed, acquired, or cancelled, other than by an ordinary purchase in the open market.

Are my dividends eligible or ineligible?

Corporate income that has been taxed at the higher rate can be paid as an eligible dividend, whereas, income that has been taxed at the lower rate small business deduction rate will be paid as an ineligible dividend.