2019 Seniors Tax Comparison: Canadian Dividends vs Other Investment Income

The table on this page compares taxes payable by province in 2019 for two different types of income:

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

To the above income we add:

	$7,253 of OAS - this is the annual max for 2019, based on Jan-Sep 2019 rates
	$8,400 of CPP retirement income
	$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 July 25, 2019.

Notes:

	The clawback of OAS reduces taxable income, and is included in taxes payable.
	BC taxes payable do not include MSP premiums because they are eliminated in 2020.
	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	$7,253
CPP	8,400
Eligible Pension Income	24,000
Total before investment income	$39,653

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
Income from above	39,653	39,653
Eligible Dividends	30,000	nil
Interest Income	nil	30,000
Total Income	69,653	69,653
Gross-up	11,400	nil
OAS Clawback	-521	nil
Taxable Income	80,532	69,653

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable OAS clawback.

Province/ Territory	2019 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	7,747	13,924	6,177	80%
BC	5,920	12,840	6,920	117%
MB	11,553	16,238	4,685	41%
NB	8,779	16,170	7,390	84%
NL	12,998	16,512	3,514	27%
NS	11,992	17,022	5,031	42%
NT	4,996	11,947	6,951	139%
NU	5,542	10,325	4,784	86%
ON	7,534	13,682	6,148	82%
PE	10,891	16,644	5,752	53%
QC	12,547	17,875	5,328	42%
SK	8,601	15,017	6,416	75%
YT	5,983	13,098	7,115	119%

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

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
Income from above	39,653	39,653
Eligible Dividends	50,000	nil
Interest Income	nil	50,000
Total Income	89,653	89,653
Gross-up	19,000	nil
OAS Clawback	-4,661	-1,811
Taxable Income	103,992	87,842

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable OAS clawback.

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	12,779	21,787	9,009	70%
BC	11,366	20,367	9,001	79%
MB	18,872	25,306	6,433	34%
NB	14,157	24,873	10,716	76%
NL	20,807	25,605	4,798	23%
NS	18,996	26,043	7,047	37%
NT	10,424	19,660	9,237	89%
NU	11,513	17,548	6,035	52%
ON	13,678	21,647	7,969	58%
PE	17,357	25,628	8,271	48%
QC	20,061	26,961	6,900	34%
SK	13,943	23,238	9,295	67%
YT	11,366	20,856	9,490	83%

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

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.

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