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Tax Comparison Seniors Investment Income 2022 TaxTips.ca
Canadian Tax and
Financial Information

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Home  ->  Personal Tax  -> Dividend tax credits -> 

Tax Rates  -> Tax Comparisons  ->  Tax comparison for seniors with investment income -> 2022

2022 Seniors Tax Comparison: Canadian Dividends vs Other Investment Income

The table on this page compares taxes payable by province in 2022 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$7,900 of OAS - this is the approximate maximum for 2022, based on Jan - Sep 2022 rates
bullet$8,731 of CPP retirement income - average for new beneficiaries Apr 2022
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 September 18, 2022, including Alberta 2022 indexation.

Notes:

bullet The clawback of OAS reduces taxable income, and is included in taxes payable.
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 $7,900
CPP 8,731
Eligible Pension Income 24,000
Total before investment income   40,631

Comparison 1: $30,00 of Eligible Dividends or Other Income

Revised to reflect indexation of Alberta's personal income tax system for 2022.

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 40,631 40,631
Eligible Dividends 30,000 nil
Other Income nil 30,000
Total Income 70,631 70,631
Gross-up 11,400 nil
OAS Clawback -41 nil
Taxable Income 81,990 70,631

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

Province/
Territory
2022 Taxes Payable Case B
Increase
in Taxes
Increase
as % of A
Case A
Dividends
Case B
Interest
AB 7,878 13,588 5,710 72%
BC 5,174 12,440 7,265 140%
MB 10,794 15,899 5,105 47%
NB 7,900 15,551 7,651 97%
NL 11,292 15,729 4,437 39%
NS 11,489 16,819 5,329 46%
NT 4,237 11,514 7,277 172%
NU 4,764 9,863 5,099 107%
ON 6,750 13,248 6,498 96%
PE 10,184 16,228 6,043 59%
QC 12,075 17,637 5,562 46%
SK 7,944 14,659 6,715 85%
YT 5,174 12,561 7,386 143%

You can see above that in BC and the territories, more than double the income tax is payable with interest or other income instead of eligible dividends.

Comparison 2: $50,000 of Eligible Dividends or Other Income

Revised to reflect indexation of Alberta's personal income tax system for 2022.

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 40,631 40,631
Eligible Dividends 50,000 nil
Other Income nil 50,000
Total Income 90,631 90,631
Gross-up 19,000 nil
OAS Clawback -4,181 -1,331
Taxable Income 105,450 89,300

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 13,301 21,142 7,841 59%
BC 10,492 19,551 9,058 86%
MB 17,986 24,549 6,563 36%
NB 13,098 23,951 10,853 83%
NL 18,578 24,227 5,648 30%
NS 18,378 25,543 7,165 39%
NT 9,550 18,863 9,313 98%
NU 10,540 16,772 6,232 59%
ON 12,548 20,859 8,311 66%
PE 16,522 24,923 8,401 51%
QC 19,375 26,452 7,077 37%
SK 13,158 22,583 9,424 72%
YT 10,492 19,998 9,505 91%

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.

Check Your Own Situation

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.

Other Tax Comparisons

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: September 18, 2022

 

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