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Manitoba -> Dividend tax credit

Manitoba Dividend Tax Credit

Eligible dividends

Manitoba Income Tax Act s. 4.7(1)(b)(ii)

The dividend tax credit for dividends eligible for the enhanced dividend tax credit is 11% of the taxable dividend amount.

The federal gross-up reductions, starting in 2010, will automatically reduce the amount of the MB enhanced dividend tax credit as a percentage of the actual dividends, as follows:

Year	2009	2010	2011	2012
Gross-up %	45%	44%	41%	38%
enhanced dividend tax credit as a % of
gross-up amount	35.44%	36.00%	37.83%	39.95%
actual dividends	15.95%	15.84%	15.51%	15.18%

The Federal 2008 Budget reduced the gross-up rate and the dividend tax credit rate for dividends eligible for the enhanced dividend tax credit. See the Enhanced Dividend Tax Credit article for details.

The following table shows the effect on the combined federal/Manitoba marginal tax rate for dividends eligible for the enhanced DTC, if no further changes are made to the Manitoba Income Tax Act.

Combined Federal/Manitoba Marginal Tax Rates on Dividends Eligible for the Enhanced DTC
Taxable Income 2010 Tax Brackets	Other Income Tax Rate 2009/2010	Eligible Dividends Marginal Tax Rates
		Current	Future
		2009 45% gross-up	2010 44% gross-up	2011 41% gross-up	2012 38% gross-up
First $31,000 (see note)	25.80%	-6.04%	-4.57%	-2.16%	-0.17%
over $31,000 up to $40,970	27.75%	-3.21%	-1.76%	0.44%	2.39%
over $40,970 up to $67,000 (see note)	34.75%	6.94%	8.32%	10.31%	12.05%
over $67,000 up to $81,941	39.40%	13.68%	15.01%	16.87%	18.46%
over $81,941 up to $127,021	43.40%	19.48%	20.77%	22.51%	23.98%
over $127,021	46.40%	23.83%	25.09%	26.74%	28.12%

Notes:

The $30,544 is increased, subject to budget balancing provisions, to

$31,000 in 2009

$32,000 in 2010 - this did not happen

$35,000 in 2011

The $66,000 is increased, subject to budget balancing provisions, to

$67,000 in 2009

$68,000 in 2010 - this did not happen

$70,000 in 2011

The marginal tax rate for dividends is a % of the actual dividends received. The tax brackets above use the income thresholds for 2010. The Federal thresholds are indexed each year, but the Manitoba thresholds are not. For marginal tax rates and thresholds for the current year, federally and for each province and territory, see the Tables of Marginal Tax Rates. To see the increase in the Federal portion of the above rates, see the Enhanced Dividend Tax Credit article.

Non-eligible dividends

Manitoba Income Tax Act s. 4.7(1)(b)(i)

For non-eligible, or small business dividends (25% gross-up), the dividend tax credit is defined as a percentage of the taxable dividend.

in 2006

	4.87% of grossed-up dividends
	6.0875% of actual dividends

in 2007

	3.67% of grossed-up dividends
	4.5875% of actual dividends

in 2008

	3.15% of grossed-up dividends
	3.9375% of actual dividends

in 2009/2010

	2.5% of grossed-up dividends
	3.125% of actual dividends

in 2011 and later years

	1.75% of grossed-up dividends
	2.1875% of actual dividends

The rates for non-eligible, or small business dividends, correspond to the reduction in the small business corporate tax rate to 4.5% for 2006, 3% for 2007, 2% for 2008, 1% for 2009 and 2010, and zero starting December 1, 2010.

Revised: November 03, 2010

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