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Before making a major financial decision you
should consult a qualified professional.
Note: The gross-up and dividend tax credit are
applicable to individuals, not corporations.
Non-eligible dividends, also known as regular, ordinary, or
small business dividends, are any dividends issued
by a Canadian corporation, public or private, which are not eligible for the eligible
dividend tax credit.
The non-eligible dividend tax credit rate is used for dividends received
by individuals from
Canadian-controlled private corporations (CCPCs), to the extent that their
income is subject to tax at the small business rate. A portion of
dividends from large public corporations may also be classified as being non-eligible dividends.
The amount included in
taxable income for non-eligible dividends in 2019 and later years is 115% of the actual dividend. The additional
15% is referred to as the
gross-up.
Timing of Inclusion in Income
The dividend is included in the recipient's income when it is paid by the
corporation, not
when it is declared.
Non-Eligible Dividends Gross-up and Tax Credit Rates
2015
2016/17
2018
2019+
Small business tax rate
11%
10.5%
10%
9%
Non-eligible dividend gross-up
18%
17%
16%
15%
ITA s. 121 fraction of gross-up
13/18
21/29
8/11
9/13
Non-eligible dividend tax credit as % of taxable dividend
11.0169%
10.5217%
10.0313%
9.0301%
The rate used to calculate the dividend tax credit for the T5 is 9/13 of the
gross-up amount.
Example of the federal non-eligible dividend tax credit calculation
for 2019 and later years:
Dividend received
$100.00
Gross-up 15%
15.00
Taxable dividend
$115.00
Dividend tax credit 9/13 x $15
$10.38
Tax credit as % of taxable dividend
9.03%
Tax credit as % of actual dividend
10.38%
Maximum Dividends Before Federal Tax Payable
For the maximum amounts of non-eligible dividends that can be earned federally and in
each province before any federal taxes are payable, see the table in the article
on alternative minimum tax.
Keep in mind that when dividends are paid out to shareholders, the company is
using income on which corporate income tax has already been paid, because
dividends are not a deductible expense.
Federal & Provincial/Territorial Non-Eligible (Small Business) Business
Dividend Tax Credit Rates
The only change for 2025 so far is for Saskatchewan, which will also increase
in 2026.
Non-Eligible
Dividend
Tax Credit Rates as a % of Grossed-up Taxable Dividends
Year
Gross-up
Federal
AB(9)
BC(11)
MB(4)
NB(5)
NL(8)
NS(10)
NT
NU
ON(7)
PE(3)
QC(6)
SK(1)
YT(2)
2025
15%
9.0301%
2.18%
1.96%
0.7835%
2.75%
3.2%
2.99%
6%
2.61%
2.9863%
1.30%
3.42%
2.938%
0.67%
2024
15%
9.0301%
2.18%
1.96%
0.7835%
2.75%
3.2%
2.99%
6%
2.61%
2.9863%
1.30%
3.42%
2.519%
0.67%
2023
15%
9.0301%
2.18%
1.96%
0.7835%
2.75%
3.2%
2.99%
6%
2.61%
2.9863%
1.30%
3.42%
2.105%
0.67%
2022
15%
9.0301%
2.18%
1.96%
0.7835%
2.75%
3.2%
2.99%
6%
2.61%
2.9863%
1.30%
3.42%
1.695%
0.67%
2021
15%
9.0301%
2.18%
1.96%
0.7835%
2.75%
3.5%
2.99%
6%
2.61%
2.9863%
1.96%
4.01%
1.695%
0.67%
2020
15%
9.0301%
2.18%
1.96%
0.7835%
2.75%
3.5%
2.99%
6%
2.61%
2.9863%
2.74%
4.77%
3.362%
2.30%
2019
15%
9.0301%
2.18%
1.96%
0.7835%
2.75%
3.5%
2.99%
6%
2.61%
3.2863%
2.74%
5.55%
3.362%
2.30%
2018
16%
10.0313%
2.16%
2.07%
0.7835%
2.853%
3.5%
3.16%
6%
2.76%
3.2863%
2.90%
6.28%
3.333%
2.26%
2017
17%
10.5217%
2.19%
2.18%
0.7835%
3.245%
3.5%
3.33%
6%
2.91%
4.2863%
3.05%
7.05%
3.367%
3.14%
2016
17%
10.5217%
3.08%
2.47%
0.7835%
3.63%
3.5%
3.33%
6%
2.91%
4.2863%
3.05%
7.05%
3.367%
3.14%
2015
18%
11.0169%
3.1%
2.59%
0.83%
4.0%
4.1%
3.5%
6%
3.051%
4.5%
3.2%
7.05%
3.4%
3.17%
2014
18%
11.0169%
3.1%
2.59%
0.83%
5.3%
4.1%
5.873%
6%
3.051%
4.5%
3.2%
7.05%
3.4%
4.03%
2013
25%
13.3333%
3.5%
3.4%
1.75%
5.3%
5%
7.7%
6%
4%
4.5%
2.9%
8%
4%
4.51%
2012
25%
13.3333%
3.5%
3.4%
1.75%
5.3%
5%
7.7%
6%
4%
4.5%
1.0%
8%
4%
4.51%
2011
25%
13.3333%
3.5%
3.4%
1.75%
5.3%
5%
7.7%
6%
4%
4.5%
1.0%
8%
5%
4.51%
2010
25%
13.3333%
3.5%
3.4%
2.5%
5.3%
5%
7.7%
6%
4%
4.5%
2.1%
8%
6%
4.45%
2009
25%
13.3333%
3.5%
4.2%
2.5%
5.3%
5%
7.7%
6%
4%
4.5%
3.2%
8%
6%
4.45%
2008
25%
13.3333%
4.5%
5.1%
3.15%
5.3%
5%
7.7%
6%
4%
5.13%
4.3%
8%
6%
4.45%
2007
25%
13.3333%
5.5%
5.1%
3.67%
5.3%
5%
7.7%
6%
4%
5.13%
6.5%
8%
6%
4.45%
Non-Eligible
Dividend
Tax Credit Rates as a % of Actual Dividends
Year
Gross-up
Federal
AB(9)
BC(11)
MB(4)
NB(5)
NL(8)
NS(10)
NT
NU
ON(7)
PE(3)
QC(6)
SK(1)
YT(2)
2025
15%
10.3846%
2.507%
2.25%
0.901%
3.163%
3.68%
3.44%
6.90%
3.0%
3.434%
1.495%
3.93%
3.3787%
0.771%
2024
15%
10.3846%
2.507%
2.25%
0.901%
3.163%
3.68%
3.44%
6.90%
3.0%
3.434%
1.495%
3.93%
2.897%
0.771%
2023
15%
10.3846%
2.507%
2.25%
0.901%
3.163%
3.68%
3.44%
6.90%
3.0%
3.434%
1.495%
3.93%
2.421%
0.771%
2022
15%
10.3846%
2.507%
2.25%
0.901%
3.163%
3.68%
3.44%
6.90%
3.0%
3.434%
1.495%
3.93%
1.949%
0.771%
2021
15%
10.3846%
2.507%
2.25%
0.901%
3.163%
4.025%
3.44%
6.90%
3.0%
3.434%
2.254%
4.61%
1.949%
0.771%
2020
15%
10.3846%
2.507%
2.25%
0.901%
3.163%
4.025%
3.44%
6.90%
3.0%
3.434%
3.151%
5.49%
3.866%
2.645%
2019
15%
10.3846%
2.507%
2.25%
0.901%
3.163%
4.025%
3.44%
6.90%
3.0%
3.779%
3.151%
6.38%
3.866%
2.645%
2018
16%
11.6363%
2.506%
2.40%
0.909%
3.309%
4.060%
3.67%
6.96%
3.2%
3.812%
3.364%
7.28%
3.866%
2.622%
2017
17%
12.3104%
2.557%
2.55%
0.917%
3.80%
4.095%
3.90%
7.02%
3.4%
5.015%
3.57%
8.249%
3.939%
3.678%
2016
17%
12.3104%
3.607%
2.89%
0.917%
4.247%
4.095%
3.90%
7.02%
3.4%
5.015%
3.57%
8.249%
3.939%
3.678%
2015
18%
13%
3.66%
3.06%
0.98%
4.72%
4.84%
4.13%
7.08%
3.6%
5.31%
3.78%
8.319%
4.01%
3.74%
2014
18%
13%
3.66%
3.06%
0.98%
6.254%
4.84%
6.93%
7.08%
3.6%
5.31%
3.78%
8.319%
4.01%
4.755%
2013
25%
16.67%
4.38%
4.25%
2.19%
6.63%
6.25%
9.63%
7.5%
5%
5.63%
3.63%
10%
5.00%
5.64%
2012
25%
16.67%
4.38%
4.25%
2.19%
6.63%
6.25%
9.63%
7.5%
5%
5.63%
1.25%
10%
5.00%
5.64%
2011
25%
16.67%
4.38%
4.25%
2.19%
6.63%
6.25%
9.63%
7.5%
5%
5.63%
1.25%
10%
6.25%
5.64%
2010
25%
16.67%
4.38%
4.25%
3.13%
6.63%
6.25%
9.63%
7.5%
5%
5.63%
2.63%
10%
7.5%
5.56%
2009
25%
16.67%
4.38%
5.25%
3.13%
6.63%
6.25%
9.63%
7.5%
5%
5.63%
4.00%
10%
7.5%
5.56%
2008
25%
16.67%
5.63%
6.38%
3.94%
6.63%
6.25%
9.63%
7.5%
5%
6.41%
5.38%
10%
7.5%
5.56%
2007
25%
16.67%
6.88%
6.38%
4.59%
6.63%
6.25%
9.63%
7.5%
5%
6.41%
8.13%
10%
7.5%
5.56%
Provincial/Territorial Legislation for the
Non-Eligible Dividend Tax Credit
In some provinces (AB, BC, NS, NU, ON, PE, and SK), the dividend tax credit is based on a % of the
federal gross-up. The change in the gross-up rate automatically
changes these dividend tax credits as a % of the taxable and actual dividend.
In other provinces (MB, NB, NL, NT, and QC) the dividend tax
credit is based on a % of the taxable
dividend. The % of the taxable dividend does not change as a
result of the change in the gross-up.
Yukon's calculation for the dividend tax credit
includes the % gross-up in the calculation, as well as the small
business corporate tax rate and highest personal income tax rate. Thus, if
any of these factors changes, the dividend tax credit automatically changes.
None of the provinces or other territories have this automatic calculation in
their Income Tax Acts.
Notes to the above table of non-eligible dividend tax credit rates:
(2) YT rates are dependent on corporate income tax rates,
highest personal income
tax (PIT) rate and gross-up %. Their 2020 Budget reduced the small business corporate income
tax rate to zero%, resulting in
the change above for 2021.
(4) MB 2016
Budget bill includes a revision for 2016 (years where the federal gross-up
is 17%), from 0.83% to 0.7835% of the
taxable dividend. MB Bill
34, The Budget Implementation and Tax Statutes Amendment Act, 2018, revised
the Income Tax Act so that the non-eligible dividend tax credit rate is
0.7835% when the federal gross-up rate is 17% or lower
(9) Alberta's Bill
15, Tax Statutes Amendment Act, 2017 was tabled in May 2017, and revised the
dividend tax credit rate to 54/359ths of the gross-up amount. The 2018
rate was announced
on December 19, 2018, with no mention of the 2019 rate. No legislation
has yet been tabled for this change. The 2019 rate is as per Bill 10 which
was tabled in June 2019 and received Royal Assent June 28, 2019. See AB
non-eligible dividend tax credit information.
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