Seniors Tax Comparison: Canadian Dividends vs Other Investment Income 2015

The table on this page compares taxes payable by province in 2015 for two different types of income

Canadian eligible dividends, and
other income, such as interest and foreign dividends.

The calculations assume that the income is received by a single senior. The tax rates used are as known on August 15, 2015.

The total income in each case includes:

$6,000 of Old Age Security
$6,000 of Canada Pension Plan retirement income
$24,000 of pension income eligible for the pension tax credit
plus either
1. $30,000 of Canadian eligible dividends, or
2. $30,000 of other income, which could be interest, foreign dividends, pension income, or other income with no special tax treatment, or
3. $50,000 of Canadian eligible dividends, or
4. $50,000 of other income

Total Federal + Provincial Income Taxes Payable in 2015
Income Type	Total Income	Taxable Income	AB	BC	MB	NB	NL	NS	NT	NU	ON	PE	QC	SK	YT
A. Cdn Eligible Dividends	$66,000	$76,711	$7,661	$7,232	$11,313	$9,408	$11,067	$11,527	$5,150	$5,975	$7,548	$10,567	$12,733	$8,661	$6,092
B. Other Income	66,000	66,000	13,578	13,452	15,740	15,715	14,819	16,337	11,655	10,374	13,404	16,058	17,640	14,734	12,792
Additional Tax Other Income (B-A)			$5,917	$6,220	$4,427	$6,307	$3,752	$4,810	$6,505	$4,399	$5,856	$5,491	$4,908	$6,073	$6,700
% Additional Tax (B-A)/A			77%	86%	39%	67%	34%	42%	126%	74%	78%	52%	39%	70%	110%
C. Cdn Eligible Dividends	86,000	100,171	$12,961	$12,886	$18,901	$15,630	$18,410	$18,767	$10,863	$12,244	$14,107	$17,301	$20,447	$14,388	$11,805
D. Other Income	86,000	84,021	21,776	21,383	25,140	24,772	23,518	25,653	19,756	18,055	21,786	25,378	27,259	23,409	20,882
Additional Tax Other Income (D-C)			$8,815	$8,497	$6,239	$9,142	$5,108	$6,886	$8,893	$5,811	$7,679	$8,077	$6,812	$9,021	$9,077
% Additional Tax (D-C)/C			68%	66%	33%	58%	28%	37%	82%	47%	54%	47%	33%	63%	77%

Notes:

The clawback of OAS in Cases A ($689), C ($4,829) and D ($1,979) reduces taxable income, and is included as taxes payable.
BC includes MSP premiums payable for 2016 based on 2015 income.
Ontario - includes Ontario Health Premium.
QC includes health contribution, contribution to the health services fund, and prescription drug insurance plan premiums.

Although the higher taxable income with Canadian eligible dividends causes a clawback of the OAS and a higher clawback of the age credit, the taxes payable are still significantly lower.

To see the tax results for your own income situation, and how it would change if the type of investment income changes, use our Detailed Income Tax and RRSP Savings Calculators, and our very simple Investment Income Tax Calculator. However, the Investment Income Tax Calculator does not include BC MSP in the total taxes, because MSP is not actually part of the income tax system. In the detailed Canadian Income Tax and RRSP Savings Calculator, the BC MSP is shown at the bottom of the calculator, but not included in the total taxes payable.

See also Tax Comparisons by Province and Territory, which compare different levels of employment income for people who are not seniors.

Tax Tip: Although Canadian dividends increase the OAS clawback, the net tax payable is still much less than with interest or foreign dividends.