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Personal Tax -> Dividend tax credits ->-> Tax Rates -> Alternative minimum tax / maximum Canadian dividends with no regular taxes payableCanadian Dividends No Tax- Until the Alternative Minimum Tax (AMT) kicks inIncome Tax Act s. 127.5Our Canadian tax calculator calculates alternative minimum tax as it relates to 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 DividendsIn 2021, regular federal taxes start to be payable when actual eligible dividends reach the amount of $63,040 (2020 $61,543), and at this point there is $1,385 (2020 $1,247) of federal AMT payable. AMT starts when the dividends reach $53,810 (2020 $53,231). The federal AMT is applicable for dividends above this amount, until the amount of the dividends reaches $154,860 (2020 $151,938), 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 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. However, if this amount exceeds the amount of dividends at which federal AMT is payable ($52,070 in 2019), 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 2020/2021 amounts are based on rates known as of January 27, 2021.
Notes: (1) BC excludes Medical Services Plan premiums, which were eliminated for 2020 and later years. (2) ON excludes Ontario Health Premium. (3) QC excludes contribution to the health services fund, health contribution, and prescription drug insurance plan premiums. (4) Refundable tax credits are excluded. (5) 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)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 is not incurred at any level of these dividends. The 2020/2021 amounts are based on rates known as of January 27, 2021.
(1) BC excludes Medical Services Plan Premiums, which were eliminated for 2020 and later years. Refundable tax credits are excluded. (2) ON excludes Ontario Health Premium. ON rate for 2014 and later years as per ON November 7, 2013 Economic Outlook. See ON dividend tax credit article. (3) 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. 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: March 17, 2022
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