Scenario 25: A Canadian resident earns dividend income from a U.S. company held in a non-registered account. How is this income generally taxed in Canada?

Question: Scenario 25: A Canadian resident earns dividend income from a U.S. company held in a non-registered account. How is this income generally taxed in Canada?

Answer options:

• It is tax-free because it is foreign income.
• It is treated as a capital gain. ✅ It is fully taxed as regular income, potentially with a foreign tax credit.
• It receives the Canadian dividend tax credit.

Correct answer: It is fully taxed as regular income, potentially with a foreign tax credit.

Explanation: Foreign dividends held in non-registered accounts are fully taxable as regular income in Canada. A foreign tax credit may be available to offset foreign withholding taxes paid. The correct answer is "It is fully taxed as regular income, potentially with a foreign tax credit.". This capacity-fill scenario 25 reinforces the same competency for the cfp bank and follows the certified explanation standard.