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

Tax Rates  -> Tax Comparisons  ->  Tax comparison for seniors with investment income -> 2024

2024 Seniors Tax Comparison: Canadian Dividends vs Other Investment Income

Tax Comparison Calculation Information

Comparison 1: $30,000 of Eligible Dividends or Other Income

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

Check Your Own Income Situation

Canadian Dividends Not Best For All Situations

Other Tax Comparisons

Tax Comparison Calculation Information

The tables on this page compare taxes payable by province in 2024 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$8,590 of OAS - this is the approximate maximum for 2024, based on Jan - Sep 2024 rates
bullet$9,800 of CPP retirement income - average for new beneficiaries Apr 2024
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 October 9, 2024.

Notes:

bullet The OAS Clawback reduces taxable income, and is included in taxes payable.
bulletThe age amount clawback reduces the tax credit and thus increases 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 $8,590
CPP 9,800
Eligible Pension Income 24,000
Total before investment income   42,390

Comparison 1: $30,000 of Eligible Dividends or Other Income

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
OAS/CPP and Pension Income 42,390 42,390
Eligible Dividends 30,000 nil
Other Income nil 30,000
Total Income 72,390 72,390
Gross-up 11,400 nil
OAS Clawback nil nil
Taxable Income 83,790 72,390

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable age credit clawback.  In these two cases there was no OAS clawback.

Province/
Territory
2024 Taxes Payable Case B
Increase
in Taxes
Increase
as % of A
Case A
Dividends
Case B
Interest
AB 7,426 13,101 5,675 76%
BC 4,800 11,991 7,191 150%
MB 9,442 14,925 5,483 58%
NB 7,116 14,792 7,676 108%
NL 10,806 15,238 4,431 41%
NS 11,414 16,782 5,368 47%
NT 3,858 11,005 7,147 185%
NU 4,213 9,304 5,092 121%
ON 6,242 12,825 6,583 105%
PE 9,763 15,836 6,074 62%
QC 10,873 16,399 5,526 51%
SK 7,476 14,118 6,642 89%
YT 4,800 12,061 7,261 151%

You can see above that in BC, NT, NU, ON and YT, 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

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
OAS/CPP and Pension Income 42,390 42,390
Eligible Dividends 50,000 nil
Other Income nil 50,000
Total Income 92,390 92,390
Gross-up 19,000 nil
OAS Clawback -4,181 -1,331
Taxable Income 107,209 91,059

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable OAS and age amount clawbacks.

Province/
Territory
Taxes Payable Case D
Increase
in Taxes
Increase
as % of C
Case C
Dividends
Case D
Interest
AB 12,048 19,997 7,949 66%
BC 9,175 18,281 9,106 99%
MB 15,126 22,160 7,035 47%
NB 11,231 22,423 11,192 100%
NL 17,287 23,044 5,756 33%
NS 17,565 24,813 7,248 41%
NT 8,233 17,593 9,361 114%
NU 8,968 15,468 6,500 72%
ON 10,586 19,510 8,924 84%
PE 15,371 23,843 8,472 55%
QC 16,904 24,506 7,602 45%
SK 11,882 21,415 9,532 80%
YT 9,175 18,743 9,569 104%

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

Check Your Own Income 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.

Dividend Gross-up Can Reduce Other Benefits

Sometimes the dividend gross-up can increase net income enough to cause a loss or reduction of other government benefits, such as GIS, GST/HST credit, Pharmacare or other benefits.

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: October 09, 2024

 

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