As with any province, the negative tax amount can only be
used to offset other taxes payable.
For BC, the above rate is only achieved when the outcome is
not affected by the low income tax reduction and the MSP
premiums. For a single person, there is a low income tax reduction
when taxable income is under $30,507 in 2012. Full MSP premiums are paid
when adjusted net income (single
person or couple) is over $30,000.
A BC single person with taxable income of $30,001 before
dividends could earn up to $7,013 of grossed-up dividends ($5,082 of actual
dividends) without getting into the next higher tax bracket. This would
reduce taxes otherwise payable by $331.57, or 6.5%, without changing the MSP
premiums. The savings is less than 6.85% because the low income tax
reduction is affected.
The negative tax rate for BC's second tax bracket, up to
$42,707, is -3.2%.
See the tables of marginal
tax rates for your province/territory to find your own marginal tax rate for
Tax Tip: Dividends from
Canadian public companies may reduce your taxes payable.
Revised: June 22, 2013