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Alternative Minimum Tax (AMT)

Income Tax Act s. 127.5

Alternative Minimum Tax and the Detailed Canadian Tax Calculator

2024 Alternative Minimum Tax Changes

2023 and Earlier Canadian Dividends No Tax

- Eligible Dividends and Alternative Minimum Tax

- Non-Eligible Dividends (Regular Dividends) and Alternative Minimum Tax

Canada Revenue Agency (CRA) Resources

Alternative Minimum Tax and the Detailed Canadian Tax Calculator

Our Canadian tax calculator calculates alternative minimum tax.

Alternative Minimum Tax does not apply in the year of death - our Canadian tax calculator does not provide an option for this.

AMT is currently calculated on form T691 Alternative Minimum Tax.

2024 Alternative Minimum Tax Changes

As proposed by the Federal 2023 Budget, changes were made to the AMT calculation effective January 1, 2024. A result of the changes to the AMT is that when Canadian dividends are the only income for a taxpayer, AMT does not apply at any level of dividends. This is because the regular tax is more than the AMT at any level of dividends.

Effective for tax years beginning after 2023:

	AMT exemption raised from $40,000 to start of 4th tax bracket ($173,205 in 2024)
	AMT rate increased from 15% to 20.5%
	50% of deductions for CPP, child care and moving expenses are disallowed in the AMT calculation.
	50% of most non-refundable tax credits are dis allowed in the AMT calculation. Previously 100% could be claimed.
	the AMT capital gains inclusion rate is increased from 80% to 100%, with capital loss carry forwards and allowable business investment losses remaining at 50% rate
	100% of the benefit associated with employee stock options is included in the AMT base.
	Only 80% of the donation tax credit is allowed to reduce the AMT. Previously 100% could be claimed.
	include 30% of capital gains on donations of publicly listed securities in the AMT base. The 30% rate would also apply to the full benefit associated with the employee stock options to the extent that a deduction is available.

For further information see the following:

Alternative Minimum Tax (AMT) for High-Income Individuals from Budget 2023

Budget 2024 Alternative Minimum Tax Changes for further changes in addition to the Budget 2023 changes.

Helpful Resources:

For a good summary of the new Alternative Minimum Tax with some examples, see Will you or your trust be affected by changes to the alternative minimum tax? from Grant Thornton LLP, updated June 21, 2024.

Charitable giving: How changes to AMT may impact your donations from Grant Thornton LLP, updated June 21, 2024.

Draft Legislation including Alternative Minimum Tax changes, and the related August 4, 2023 News Release.

Notice of Ways and Means Motion which includes changes to the AMT, and which became Bill C-69, Budget Implementation Act, 2024, No. 1 was tabled and past first reading, receiving Royal Assent on June 20, 2024. It includes the changes to AMT.

2023 and Earlier Canadian Dividends No Tax

Alternative Minimum Tax 2023 and Earlier re Canadian Dividends

In this article, we talk about what can be earned in Canadian eligible or non-eligible dividends before regular federal or provincial taxes are payable, and before alternative minimum tax applies, if there is no income other than the eligible or non-eligible dividends. The results shown are for a single person.

Eligible Dividends and Alternative Minimum Tax

In 2023:

regular federal taxes start to be payable when actual eligible dividends reach the amount of $68,558 (2022 $65,061)

at this point there is $2,033 (2022 $1,599) of federal AMT payable.

AMT starts when the dividends reach $55,002 (2022 $54,403).

Federal AMT is applicable for dividends above this amount, until the amount of the dividends reaches $175,218 (2022 $161,215), when the regular federal tax equals or exceeds the minimum amount.

In the following table:

the federal row for eligible dividends shows the amount of actual dividends that can be earned before regular federal tax is payable for a single person with only the basic personal amount tax credit, if there is no income other than the dividends.

the provincial information shows the amount of actual dividends that can be earned in each province before any regular provincial income tax (net of any low income tax reduction) is payable.

	However, if this amount exceeds the amount of dividends at which federal AMT is payable ($54,403 in 2022), AMT will be payable for all provinces except Quebec, which does not base its AMT on the federal AMT.
	the provincial information also shows the total amount of regular federal income tax, plus federal and provincial AMT payable at the indicated amount of dividends.

The 2023/2022 amounts are based on rates known as of June 13, 2023.

TaxTips.ca - Actual Eligible Dividends Before Regular Income Tax is Payable

		2023		2022		2021
Province	Prov AMT as % of Fed AMT	Actual Dividends	Fed Tax + AMT	Actual Dividends	Fed Tax + AMT	Actual Dividends	Fed Tax + AMT
Federal		$68,558	$2,033	$65,061	$1,599	$63,040	$1,385
AB	35.00%	80,965	4,833	76,382	4,056	74,667	3,820
BC (3)	33.70%	186,226	20,986	175,684	19,865	172,067	19,524
MB	50.00%	35,677	0	26,954	0	26,408	0
NB	57.00%	151,011	15,270	127,419	11,875	122,413	11,140
NL	51.30%	27,279	0	25,758	0	18,223	0
NS	57.50%	32,408	0	32,408	0	32,408	0
NT (3)	45.00%	246,385	35,913	231,791	33,786	226,356	32,052
NU (3)	45.00%	88,848	6,278	83,570	5,345	81,623	3,556
ON (1)	33.67%	104,474	8,811	98,105	7,676	95,807	7,320
PE	57.50%	51,246	0	49,528	0	48,669	0
QC (2)	n/a	48,353	0	41,370	0	40,302	0
SK	50.00%	117,806	10,733	110,835	9,522	108,225	9,124
YT (43)	42.70%	448,001	85,939	437,294	84,777	433,328	84,350

Federal AMT starts at		$55,002		$54,403		$53,810

Notes:

(1) ON excludes Ontario Health Premium. The 2022 Federal tax + AMT for ON has been revised since this article was published in September 2022.

(2) QC excludes contribution to the health services fund, health contribution, and prescription drug insurance plan premiums.

(3) Refundable tax credits are excluded.

(4) Provincial AMT is calculated as a % of federal AMT, except for Quebec. Thus, even though the eligible dividends may not reach the taxable level in a particular province, they will still be subject to AMT if there is federal AMT. The BC, NL and ON AMT rates are calculated as lowest provincial tax rate / lowest federal tax rate. Quebec's AMT is not based on the federal AMT, and Canadian dividends, eligible or non-eligible (small business) do not incur provincial AMT in Quebec.

See our tables of dividend tax credit rates for eligible dividends by year from 2007 to present for every province & territory, for dividend tax credit rates for each province and territory.

The above table only relates to AMT regarding eligible Canadian dividends. AMT may be applicable in other situations when taxpayers have high incomes, yet have little tax payable on the income. The exemption level for federal AMT is $40,000.

For more information on alternative minimum tax, see the Canada Revenue Agency information on Minimum Tax web page. The AMT is calculated on form T691.

Non-Eligible Dividends (Regular Dividends) and Alternative Minimum Tax

In the following table:

the federal column for non-eligible dividends shows the amount of actual dividends that can be earned before regular federal tax is payable, if there is no income other than the dividends.

the provincial columns show the amount of actual dividends that can be earned in each province before any regular provincial income tax (net of any low income tax reduction) is payable.

Alternative minimum tax (AMT) is not incurred at any level of these dividends.

The 2023/2022 amounts are based on rates known as of June 13, 2023. The 2022 amounts for NL and SK have been revised from the amounts published in September 2022.

TaxTips.ca - Actual Non-Eligible Dividend Income Before Regular Income Taxes Are Payable
Year	Gross -up	Federal	AB	BC	MB	NB	NL	NS	ON(1)	PE	QC(2)	SK
2023	15%	32,784	23,358	25,482	14,587	22,788	21,974	16,582	36,798	16,366	18,181	19,212
2022	15%	31,461	22,035	24,045	10,437	21,430	20,750	16,582	34,541	14,862	18,181	17,323
2021	15%	30,172	21,541	23,552	10,259	19,578	20,471	16,582	33,733	15,298	18,670	16,827
2020	15%	28,907	21,541	23,300	10,175	19,391	20,392	16,582	33,440	16,081	19,807	20,552
2019	15%	26,373	21,541	22,726	9,994	19,026	20,205	16,582	38,244	15,125	21,078	20,552
2018	16%	30,737	20,801	22,340	9,701	18,652	19,676	16,702	37,105	15,197	22,264	20,293
2017	17%	33,313	20,456	22,082	9,525	18,972	18,740	14,673	43,566	14,548	24,016	19,996
2016	17%	32,855	22,792	22,712	9,410	19,495	18,634	14,673	42,863	14,365	22,065	19,517
2015	18%	36,160	22,377	22,718	9,968	19,910	18,705	14,791	43,807	13,558	21,641	19,188
2014	18%	35,551	21,848	21,628	9,968	23,014	18,333	21,666	42,946	12,825	21,410	18,866
2013	25%	43,432	21,653	25,059	9,998	21,910	19,281	28,339	40,141	11,657	22,390	19,160
2012	25%	42,584	21,276	27,711	9,805	21,875	18,807	28,339	39,425	9,140	21,850	18,789
2011	25%	41,420	20,900	27,062	9,603	21,417	18,241	28,339	38,164	9,140	21,284	21,324

(1) ON excludes Ontario Health Premium.

(2) QC excludes contribution to the health services fund, health contribution, and prescription drug insurance plan premiums.

See our tables of rates for non-eligible (small business) dividends, which shows the dividend tax rates for 2007 to present for each province and territory.

See our article on non-eligible (small business) dividends for more information.

To see the tax results for your own income situation, and how it would change if the type of investment income changes, use our Income Tax Planning Calculators, in particular the Investment Income Tax Calculator.

For a comparison of taxes for all provinces and territories for 2021 and earlier years, including marginal tax rates for eligible and non-eligible dividends, capital gains and other income, see the Basic Canadian Tax Calculator.

Canada Revenue Agency (CRA) Resources

Minimum Tax

Form T691 Alternative Minimum Tax

Tax Tip: Everyone's situation differs. Seek the advice of a professional tax advisor if you think there is a possibility you may be subject to alternative minimum tax.

Revised: July 14, 2024