The federal gross-up reductions, starting in 2010, will
automatically reduce the amount of the BC enhanced dividend tax credit as
follows:
Year
2009
2010
2011
2012
Gross-up %
45%
44%
41%
38%
enhanced dividend tax credit as a % of
grossed-up dividends
11%
10.83%
10.31%
9.76%
actual dividends
15.95%
15.60%
14.53%
13.47%
The Federal 2008 Budget reduced the gross-up
rate and the dividend tax credit rate
for dividends eligible for the enhanced dividend tax credit. See the
Enhanced Dividend Tax Credit article
for details. The following table shows the effect on the
combined federal/BC marginal tax rate for dividends eligible for the enhanced DTC, if no
further changes are made to the BC Income Tax Act. The table
includes rates known as of November 28, 2009.
Combined Federal/BC Marginal Tax Rates
on Dividends Eligible
for the Enhanced DTC
Taxable Income
2010 Tax Brackets
Other
Income
Tax Rate
2009/
2010
Eligible Dividends Marginal Tax Rates
2009
45%
gross-up
2010
44%
gross-up
2011
41%
gross-up
2012
38%
gross-up
First $35,859
20.06%
-14.36%
-12.59%
-9.42%
-6.51%
over $35,859 up to $40,970
22.70%
-10.54%
-8.79%
-5.70%
-2.87%
over $40,970 up to $71,719
29.70%
-0.38%
1.29%
4.17%
6.79%
over $71,719 up to $81,941
32.50%
3.68%
5.32%
8.12%
10.65%
over $81,941 up to $82,342
36.50%
9.48%
11.08%
13.76%
16.17%
over $82,342 up to $99,987
38.29%
12.07%
13.66%
16.28%
18.64%
over $99,987 up to $127,021
40.70%
15.57%
17.13%
19.68%
21.97%
over $127,021
43.70%
19.92%
21.45%
23.91%
26.11%
The marginal tax rate for dividends is a % of the
actual dividends received. The tax brackets above use the income
thresholds for 2010. These thresholds are indexed each year.
For marginal tax rates and thresholds for the current year, federally and
for each province and territory, see the Tables
of Marginal Tax Rates. To see the increase in the federal portion of the above
rates, see the Enhanced Dividend Tax
Credit article.
Non-eligible dividends
The BC 2009 budget announced
reductions in the regular (small business) dividend tax
credit rate effective January 1, 2010.
The information on this site is not intended to be a
substitute for professional advice. Each person's situation differs, and
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site to your best advantage.
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