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Tax Comparison Seniors Investment Income 2015 - Canadian Dividends vs Interest

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Personal Tax -> Dividend tax credits -> 
Tax Rates -> Tax Comparisons ->  Tax comparison for seniors with investment income -> 2015

Seniors Tax Comparison: Canadian Dividends vs Other Investment Income 2015

The table on this page compares taxes payable by province in 2015 for two different types of income

- Canadian dividends eligible for the enhanced dividend tax credit, and

- other income, such as interest and foreign dividends.

The calculations assume that the income is received by a single senior. The tax rates used are as known on August 15, 2015.

The total income in each case includes:

bullet$6,000 of Old Age Security
bullet$6,000 of Canada Pension Plan retirement income
bullet $24,000 of pension income eligible for the pension tax credit
bullet plus either
  1. $30,000 of Canadian dividends eligible for the enhanced dividend tax credit, or
  2. $30,000 of other income, which could be interest, foreign dividends, pension income, or other income with no special tax treatment, or
  3. $50,000 of Canadian eligible dividends, or
  4. $50,000 of other income
Total Federal + Provincial Income Taxes Payable in 2015
Income
Type
Total
Income
Taxable
Income
AB BC MB NB NL NS NT NU ON PE QC SK YT
A. Cdn Eligible Dividends $66,000 $76,711 $7,661 $7,232 $11,313 $9,408 $11,067 $11,527 $5,150 $5,975 $7,548 $10,567 $12,733 $8,661 $6,092
B. Other Income 66,000 66,000 13,578 13,452 15,740 15,715 14,819 16,337 11,655 10,374 13,404 16,058 17,640 14,734 12,792
Additional Tax Other Income (B-A) $5,917 $6,220 $4,427 $6,307 $3,752 $4,810 $6,505 $4,399 $5,856 $5,491 $4,908 $6,073 $6,700
% Additional Tax (B-A)/A 77% 86% 39% 67% 34% 42% 126% 74% 78% 52% 39% 70% 110%
C. Cdn Eligible Dividends 86,000 100,171 $12,961 $12,886 $18,901 $15,630 $18,410 $18,767 $10,863 $12,244 $14,107 $17,301 $20,447 $14,388 $11,805
D. Other Income 86,000 84,021 21,776 21,383 25,140 24,772 23,518 25,653 19,756 18,055 21,786 25,378 27,259 23,409 20,882
Additional Tax Other Income (D-C) $8,815 $8,497 $6,239 $9,142 $5,108 $6,886 $8,893 $5,811 $7,679 $8,077 $6,812 $9,021 $9,077
% Additional Tax (D-C)/C 68% 66% 33% 58% 28% 37% 82% 47% 54% 47% 33% 63% 77%

Notes:
     - The clawback of OAS in Cases A ($689), C ($4,829) and D ($1,979) reduces taxable income, and is included as taxes payable.
     - BC includes MSP premiums payable for 2016 based on 2015 income.
     - Ontario - includes Ontario Health Premium.
     - QC includes health contribution, contribution to the health services fund, and prescription drug insurance plan premiums.

Although the higher taxable income with Canadian eligible dividends causes a clawback of the OAS and a higher clawback of the age credit, the taxes payable are still significantly lower.

To see the tax results for your own income situation, and how it would change if the type of investment income changes, use our Income Tax Planning Calculators, in particular the Investment Income Tax Calculator.  However, the Investment Income Tax Calculator does not include BC MSP in the total taxes, because MSP is not actually part of the income tax system.  In the detailed Canadian Income Tax and RRSP Savings Calculator, the BC MSP is shown at the bottom of the calculator, but not included in the total taxes payable.

See also Tax Comparisons by Province and Territory, which compare different levels of employment income for people who are not seniors.

Tax Tip:  Although Canadian dividends increase the OAS clawback, the net tax payable is still much less than with interest or foreign dividends.

 

Revised: September 20, 2017

 

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