Canadian Dividends No Tax

- Until the Alternative Minimum Tax (AMT) kicks in

Income Tax Act s. 127.5

Our 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 Dividends

In 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.

Actual Eligible Dividends Before Regular Income Tax is Payable

		2021		2020		2019
Province	Prov AMT as % of Fed AMT	Actual Dividends	Fed Tax + AMT	Actual Dividends	Fed Tax + AMT	Actual Dividends	Fed Tax + AMT
Federal		$63,040	$1,385	$61,543	$1,247	$58,574	$975
AB	35.00%	74,667	3,820	148,224	14,423	148,224	14,498
BC (1)(4)	33.70%	172,067	19,524	170,198	19,289	174,151	20,698
MB	50.00%	26,408	0	26,146	0	25,588	0
NB	57.00%	122,413	11,140	121,201	10,985	118,941	10,705
NL	51.30%	18,223	0	18,151	0	18,495	0
NS	57.50%	32,408	0	32,408	0	32,408	0
NT (4)	45.00%	226,356	32,052	224,117	31,726	219,942	32,060
NU (4)	45.00%	81,623	3,556	80,797	3,484	79,292	4,866
ON (2)	33.67%	95,807	7,320	94,952	7,237	93,174	7,818
PE	57.50%	48,669	0	48,096	0	47,134	0
QC (3)	n/a	40,301		39,800		39,503
SK	50.00%	108,225	9,124	107,166	9,016	107,166	9,109
YT (4)	42.70%	433,328	84,350	431,678	84,169	428,622	83,839

Federal AMT starts at		$53,810		$53,231		$52,070

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.

Actual Non-Eligible Dividend Income Before Regular Income Taxes Are Payable
Year	Gross -up	Federal	AB	BC(1)	MB	NB	NL	NS	ON(2)	PE	QC(3)	SK
2021	15%	30,172	21,541	23,552	10,259	19,578	20,471	16,582	33,733	16,795	18,670	20,757
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) 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: September 14, 2021