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Before making a major financial decision you
should consult a qualified professional.
The net income amount is
often used in calculating eligibility for income-tested benefits such as
Pharmacare, Guaranteed Income Supplement and other benefits. For taxpayers who are in lower tax brackets,
but have these dividends as a portion of their income, these
benefits may be reduced. For every $1,000 of actual
dividends received, the net income for tax purposes is $1,380. Canada and each province/territory have
different net income thresholds for different social
programs. If you are in a low tax bracket and receive
income from dividends, you should review your finances to
avoid jeopardizing government benefits.
See the comparison
of taxes payable for seniors, which compares a senior with eligible dividend
income to a senior with interest or other investment income. With the
eligible dividends, even when the Old Age Security is clawed back, the total
taxes including the clawback are less than when interest income is received.
Check out our Investment
Income Tax Calculators to see the effect of moving income from income such
as interest and foreign dividends to Canadian Dividends.
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