2024 Seniors Tax Comparison: Canadian Dividends vs Other Investment Income

Tax Comparison Calculation Information

Comparison 1: $30,000 of Eligible Dividends or Other Income

Comparison 2: $50,000 of Eligible Dividends or Other Income

Check Your Own Income Situation

Canadian Dividends Not Best For All Situations

Other Tax Comparisons

Tax Comparison Calculation Information

The tables on this page compare taxes payable by province in 2024 for two different types of income:

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

To the above income we add:

	$8,590 of OAS - this is the approximate maximum for 2024, based on Jan - Sep 2024 rates
	$9,800 of CPP retirement income - average for new beneficiaries Apr 2024
	$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 October 9, 2024.

Notes:

	The OAS Clawback reduces taxable income, and is included in taxes payable.
	The age amount clawback reduces the tax credit and thus increases taxes payable.
	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	$8,590
CPP	9,800
Eligible Pension Income	24,000
Total before investment income	42,390

Comparison 1: $30,000 of Eligible Dividends or Other Income

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
OAS/CPP and Pension Income	42,390	42,390
Eligible Dividends	30,000	nil
Other Income	nil	30,000
Total Income	72,390	72,390
Gross-up	11,400	nil
OAS Clawback	nil	nil
Taxable Income	83,790	72,390

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable age credit clawback. In these two cases there was no OAS clawback.

Province/ Territory	2024 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	7,426	13,101	5,675	76%
BC	4,800	11,991	7,191	150%
MB	9,442	14,925	5,483	58%
NB	7,116	14,792	7,676	108%
NL	10,806	15,238	4,431	41%
NS	11,414	16,782	5,368	47%
NT	3,858	11,005	7,147	185%
NU	4,213	9,304	5,092	121%
ON	6,242	12,825	6,583	105%
PE	9,763	15,836	6,074	62%
QC	10,873	16,399	5,526	51%
SK	7,476	14,118	6,642	89%
YT	4,800	12,061	7,261	151%

You can see above that in BC, NT, NU, ON and YT, more than double the income tax is payable with interest or other income instead of eligible dividends.

Comparison 2: $50,000 of Eligible Dividends or Other Income

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
OAS/CPP and Pension Income	42,390	42,390
Eligible Dividends	50,000	nil
Other Income	nil	50,000
Total Income	92,390	92,390
Gross-up	19,000	nil
OAS Clawback	-4,181	-1,331
Taxable Income	107,209	91,059

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable OAS and age amount clawbacks.

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	12,048	19,997	7,949	66%
BC	9,175	18,281	9,106	99%
MB	15,126	22,160	7,035	47%
NB	11,231	22,423	11,192	100%
NL	17,287	23,044	5,756	33%
NS	17,565	24,813	7,248	41%
NT	8,233	17,593	9,361	114%
NU	8,968	15,468	6,500	72%
ON	10,586	19,510	8,924	84%
PE	15,371	23,843	8,472	55%
QC	16,904	24,506	7,602	45%
SK	11,882	21,415	9,532	80%
YT	9,175	18,743	9,569	104%

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

Check Your Own Income Situation

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.

Dividend Gross-up Can Reduce Other Benefits

Sometimes the dividend gross-up can increase net income enough to cause a loss or reduction of other government benefits, such as GIS, GST/HST credit, Pharmacare or other benefits.

Other Tax Comparisons

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 09, 2024