Ontario -> Dividend tax credit
Ontario dividend tax credit
Ontario
Taxation Act s. 13 for taxation years ending 2009 or later
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 2009 budget announced reductions in the corporate
income tax rates beginning in 2010, and corresponding reductions in the dividend
tax credit rate for 2010. The following table shows the proposed changes
to the dividend tax credit as a percentage of taxable dividends:
The above changes are included in Bill
218, Ontario Tax Plan for More Jobs and Growth Act, 2009 which was
introduced in the Legislative Assembly on November 16, 2009.
These changes are reflected in the tables below.
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 amount automatically applies to the provincial treatment of these
dividends. The following tables include the proposed changes in Bill
218, which are subject to legislative approval.
|
Ontario Dividend Tax Credit Rate
on Eligible Dividends
after changes to gross-up percentage |
| Year |
Gross-up |
% of Grossed-up
Dividend |
% of Actual
Dividend |
| 2007 |
45% |
6.70% |
9.715% |
| 2008 |
45% |
7.00% |
10.150% |
| 2009 |
45% |
6.40% |
10.730% |
| 2010 |
44% |
6.40% |
9.216% |
| 2011 |
41% |
6.40% |
9.024% |
| 2012 & later |
38% |
6.40% |
8.832% |
The combined
federal/Ontario marginal tax rates for
eligible dividends will be as shown in the following table, which includes the
surtax levels as proposed in Bill 218:
Combined Federal/Ontario Marginal Tax Rates
on Dividends Eligible
for the Enhanced DTC
|
Taxable Income
2010 Thresholds |
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 $37,106 |
21.05% |
-7.71% |
-6.23% |
-2.52% |
-0.51% |
| over $37,106 up to $40,970 |
24.15% |
-3.21% |
-0.32% |
1.85% |
3.77% |
| over $40,970 up to $65,345 |
31.15% |
6.94% |
9.76% |
11.72% |
13.43% |
| over $65,345 up to $74,214 |
32.98% |
7.45% |
10.55% |
12.50% |
14.19% |
| over $74,214 up to $76,986 |
35.39% |
10.94% |
14.02% |
15.90% |
17.52% |
| over $76,986 up to $81,941 |
39.41% |
12.91% |
16.49% |
18.32% |
19.88% |
| over $81,941 up to $127,021 |
43.41% |
18.71% |
22.25% |
23.96% |
25.40% |
| over $127,021 |
46.41% |
23.06% |
26.57% |
28.19% |
29.54% |
The marginal tax rate for dividends is a % of the actual
dividends received. The above rates include surtaxes. The tax
brackets above use the income thresholds for 2008. 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 rate, see the
Enhanced Dividend Tax Credit article.
Revised: November 28, 2009
