2023 Seniors Tax Comparison: Canadian Dividends vs Other Investment Income

The table on this page compares taxes payable by province in 2023 for two different types of income:

	Canadian eligible dividends, and
	other income, such as interest and foreign dividends.

To the above income we add:

	$8,782 of OAS - this is the approximate maximum for 2023, based on Jan - Jun 2023 rates
	$9,735 of CPP retirement income - average for new beneficiaries Jan 2023
	$24,000 of pension income that is eligible for the pension income tax credit

The calculations assume that the income is received by a single senior. The tax rates used are as known on June 8, 2023.

Notes:

	The clawback of OAS reduces taxable income, and is included in taxes payable.
	The age amount clawback reduces the tax credit and thus increases taxes payable.
	Ontario - includes Ontario Health Premium.
	QC includes health contribution, contribution to the health services fund, and prescription drug insurance plan premiums.

Income Type	Annual Amount
OAS	$8,282
CPP	9,735
Eligible Pension Income	24,000
Total before investment income	42,017

Comparison 1: $30,000 of Eligible Dividends or Other Income

The first comparison uses $30,000 of eligible dividends compared to $30,000 of other income.

Income Type	Annual Income
Income Type	Case A Dividends	Case B Interest
OAS/CPP and Pension Income	42,017	42,017
Eligible Dividends	30,000	nil
Other Income	nil	30,000
Total Income	72,017	72,017
Gross-up	11,400	nil
OAS Clawback	nil	nil
Taxable Income	83,417	72,017

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable age credit clawback. In these two cases there was no OAS clawback.

Province/ Territory	2023 Taxes Payable		Case B Increase in Taxes	Increase as % of A
Province/ Territory	Case A Dividends	Case B Interest	Case B Increase in Taxes	Increase as % of A
AB	7,781	13,468	5,688	73%
BC	5,063	12,342	7,279	144%
MB	10,116	15,423	5,307	52%
NB	7,485	15,208	7,723	103%
NL	11,162	15,625	4,463	40%
NS	11,615	16,980	5,365	46%
NT	4,121	11,380	7,259	176%
NU	4,586	9,685	5,099	111%
ON	6,605	13,107	6,502	98%
PE	10,164	16,232	6,068	60%
QC	11,299	16,918	5,619	50%
SK	7,833	14,525	6,692	85%
YT	5,063	12,441	7,379	146%

You can see above that in BC, NB, and the territories, more than double the income tax is payable with interest or other income instead of eligible dividends.

Comparison 2: $50,000 of Eligible Dividends or Other Income

The next comparison uses $50,000 of eligible dividends compared to $50,000 of other income.

Income Type	Annual Income
Income Type	Case C Dividends	Case D Interest
OAS/CPP and Pension Income	42,017	42,017
Eligible Dividends	50,000	nil
Other Income	nil	50,000
Total Income	92,017	92,017
Gross-up	19,000	nil
OAS Clawback	-3,616	-766
Taxable Income	107,401	91,251

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable OAS and age amount clawbacks.

Province/ Territory	Taxes Payable		Case D Increase in Taxes	Increase as % of C
Province/ Territory	Case C Dividends	Case D Interest	Case D Increase in Taxes	Increase as % of C
AB	12,697	20,692	7,995	63%
BC	9,822	18,993	9,171	93%
MB	16,841	23,558	6,717	40%
NB	11,977	23,144	11,167	93%
NL	17,972	23,774	5,802	32%
NS	18,049	25,352	7,302	40%
NT	8,880	18,346	9,466	107%
NU	9,760	16,229	6,469	66%
ON	11,558	20,294	8,736	76%
PE	16,031	24,586	8,555	53%
QC	17,840	25,279	7,439	42%
SK	12,555	22,133	9,578	76%
YT	9,822	19,498	9,676	99%

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

Check Your Own Situation

To see the tax results for your own income situation, and how it would change if the type of investment income changes, use our Detailed Income Tax and RRSP Savings Calculators, and our very simple Investment Income Tax Calculator.

Canadian Dividends Not Best For All Situations

Sometimes the dividend gross-up can increase net income enough to cause a loss or reduction of other government benefits, such as GIS, GST/HST credit, Pharmacare or other benefits.

Other Tax Comparisons

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: October 26, 2023