Ontario -> Dividend tax credit
Ontario Taxation Act s. 20.1 for taxation years ending 2014 or later
Ontario Taxation Act s. 13 for taxation years ending 2009 to 2013
Ontario Income Tax Act s. 4(3.4) for taxation years ending 2008 or earlier
Ontario's Taxation Act, which is for taxation years ending in 2009 or later, specifies the dividend tax credits for both eligible and non-eligible dividends as a percentage of the federal dividend tax credit.
Ontario's November 7, 2013 Economic Outlook and Fiscal Review Chapter VI: Taxation announced revisions to both eligible and non-eligible dividend rates. Another change is that the Ontario surtax, starting in 2014, will be calculated before deducting dividend tax credits. By doing so, all taxpayers would get the same amount of dividend tax credit. Previously, the surtax was applied after these tax credits were deducted, thus increasing the tax credits for high income earners by as much as 56%. These measures were included with proposals in the 2014 Budget.
Ontario Enhanced Dividend Tax Credit for Eligible Dividends
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 change in the gross-up rate automatically applies to the provincial treatment of these dividends.
Ontario's November 7, 2013 Economic Outlook announced that the rate for the enhanced dividend tax credit for eligible dividends would be increased to 10%, but the surtax will be calculated prior to the deduction of the dividend tax credit. This was confirmed in the 2014 Budget. The legislation was revised to define the tax credit as 36.3158% of the gross-up on the dividends, which equates to 10% of the taxable dividend.
Ontario Taxation Act s. 20.1(b) for 2014 and later years
The Federal 2016 Budget announced that the gross-up rate for non-eligible dividends (also know as regular dividends, or small business dividends) would be not be revised further after 2016, and the Federal tax credit rate for these dividends would remain at 2016 rates.
The Ontario 2016 Budget confirmed that the 2016 tax credit rate would be 4.2863% of the taxable dividend, but indicated that they would review the rate for 2017 and later years. Nothing was changed with the 2017 Budget.
The current and past Ontario rates for non-eligible dividends are shown in the following table. The 2017 and later rates will be in effect unless legislative changes are made by Ontario.
The combined federal/Ontario marginal tax rates for eligible and non-eligible dividends and other income are found in the table of Ontario marginal tax rates.
See our tables of non-eligible dividend tax credit rates for all provinces and territories.
Revised: September 19, 2017
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