Ads keep this website free for you.
TaxTips.ca does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Tax Comparison Seniors Investment Income 2017 TaxTips.ca
Canadian Tax and
Financial Information

If you use an ad blocker, please consider a small contribution to help keep TaxTips.ca free for everyone.

Need an accounting, tax or financial advisor? Look in our Directory.  Use above search box to easily find your topic!   Stay Connected with TaxTips.ca!
Home
What's New
Calculators
Personal Tax
Business
Sales Taxes
Free in 30!
Financial Planning
RRSP RRIF TFSA
Real Estate
Stocks Bonds etc.
Seniors
Disabilities
Canada
Alberta
British Columbia
Manitoba
Ontario
Quebec
Saskatchewan
Atlantic Provinces
Territories
Federal Budget
Prov/Terr Budgets
Statistics etc.
Glossary
Site Map
Directory
Advertise With Us
Contact Us/About Us
Links & Resources
Personal Tax  -> Dividend tax credits -> 
Tax Rates  -> Tax Comparisons  ->  Tax comparison for seniors with investment income -> 2017

2017 Seniors Tax Comparison: Canadian Dividends vs Other Investment Income

The table on this page compares taxes payable by province in 2017 for two different types of income:

bulletCanadian eligible dividends, and
bulletother income, such as interest and foreign dividends.

To the above income we add:

bullet$6,942 of OAS - this is the annual max for 2017 based on Jan to Jun 2017 rates
bullet$8,221 of CPP retirement income
bullet$24,000 of pension income that is eligible for the pension income tax credit

The calculations assume that the income is received by a single senior. The tax rates used are as known on June 14, 2017.

Notes:

bullet The clawback of OAS reduces taxable income, and is included in taxes payable.
bullet BC taxes payable include MSP premiums payable for 2018 based on 2017 income.
bullet Ontario - includes Ontario Health Premium.
bullet QC includes health contribution, contribution to the health services fund, and prescription drug insurance plan premiums.

 

Income
Type
Annual
Amount
OAS $6,942
CPP 8,221
Eligible Pension Income 24,000
Total before investment income   $39,164

The first comparison uses $30,000 of eligible dividends compared to $30,000 of other income.

Income
Type
Annual Income
Case A
Dividends
Case B
Interest
Income from above 39,164 39,164
Eligible Dividends 30,000 nil
Interest Income nil 30,000
Total Income 69,164 69,164
Gross-up 11,400 nil
OAS Clawback -866 nil
Taxable Income 79,697 69,164
 

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable OAS clawback.

Province/
Territory
2017 Taxes Payable Case B
Increase
in Taxes
Increase
as % of A
Case A
Dividends
Case B
Interest
AB 8,122 14,099 5,977 74%
BC 7,660 13,892 6,231 81%
MB 11,975 16,410 4,435 37%
NB 9,155 16,346 7,190 79%
NL 13,381 16,736 3,354 25%
NS 12,237 17,101 4,863 40%
NT 5,403 12,120 6,717 124%
NU 6,349 10,786 4,436 70%
ON 7,976 13,867 5,891 74%
PE 11,235 16,778 5,543 49%
QC 13,256 18,401 5,145 39%
SK 9,138 15,201 6,063 66%
YT 6,305 13,271 6,966 110%

You can see above that in a couple of the territories, more than double the income tax is payable with interest instead of eligible dividends.

The next comparison uses $50,000 of eligible dividends compared to $50,000 of other income.

Income
Type
Annual Income
Case C
Dividends
Case D
Interest
Income from above 39,164 39,164
Eligible Dividends 50,000 nil
Interest Income nil 50,000
Total Income 89,164 89,164
Gross-up 19,000 nil
OAS Clawback -5,006 -2,156
Taxable Income 103,158 87,008

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable OAS clawback.

Province/
Territory
Taxes Payable Case D
Increase
in Taxes
Increase
as % of C
Case C
Dividends
Case D
Interest
AB 13,245 22,110 8,865 67%
BC 13,149 21,659 8,511 65%
MB 19,386 25,481 6,095 31%
NB 14,663 25,235 10,572 72%
NL 21,335 25,989 4,654 22%
NS 19,327 26,237 6,910 36%
NT 10,900 20,076 9,176 84%
NU 12,455 18,048 5,593 45%
ON 14,384 22,099 7,715 54%
PE 17,792 25,919 8,127 46%
QC 20,881 27,735 6,854 33%
SK 14,700 22,327 7,628 52%
YT 11,842 21,186 9,344 79%

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.

Revised: April 27, 2021

 

 

Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved.  See Reproduction of information from TaxTips.ca

Facebook  | Twitter  |  See What’s New, stay connected with TaxTips.ca by RSS or Email
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.