Ontario -> Dividend Tax Credits
- s. 19.1 for taxation years ending 2016 or later
- s. 20.1 for taxation years ending 2014 or 2015
- s. 13 for taxation years ending 2009 to 2013
- s. 4(3.4) for taxation years ending 2008 or earlier
Ontario's Taxation Act, which is for taxation years ending in 2009 or later, specifies the dividend tax credits for both eligible and non-eligible dividends as a percentage of the federal dividend tax credit.
Ontario's November 7, 2013 Economic Outlook and Fiscal Review Chapter VI: Taxation announced revisions to both eligible and non-eligible dividend rates. Another change is that the Ontario surtax, starting in 2014, will be calculated before deducting dividend tax credits. By doing so, all taxpayers would get the same amount of dividend tax credit. Previously, the surtax was applied after these tax credits were deducted, thus increasing the tax credits for high income earners by as much as 56%. These measures were included with proposals in the 2014 Budget.
Ontario Enhanced Dividend Tax Credit for Eligible Dividends
The Federal 2008 Budget reduced the gross-up rate and the dividend tax credit rate for dividends eligible for the enhanced dividend tax credit. See the Enhanced Dividend Tax Credit article for details. The change in the gross-up rate automatically applies to the provincial treatment of these dividends.
Ontario's November 7, 2013 Economic Outlook announced that the rate for the enhanced dividend tax credit for eligible dividends would be increased to 10%, but the surtax will be calculated prior to the deduction of the dividend tax credit. This was confirmed in the 2014 Budget. The legislation was revised to define the tax credit as 36.3158% of the gross-up on the dividends, which equates to 10% of the taxable dividend.
Ontario Taxation Act, 2007 s. 19.1(a.1) for 2018 and later years, 19.1(a) for 2016/2017, 20.1(b) for 2014/2015
The Ontario Taxation Act, 2007 defines the non-eligible dividend tax credit as a percentage of the federal gross-up.
The Federal 2017 Fall Economic Statement announced that the gross-up rate for non-eligible dividends (also know as regular dividends, or small business dividends) would be reduced to 16% for 2018, and to 15% for 2019 and later years.
The 2018 and 2019 marginal tax rates for non-eligible dividends reflect the changes in the non-eligible dividend tax credit rate included in Bill 57, Restoring Trust, Transparency and Accountability Act, 2018, tabled November 15, 2018 re the Ontario 2018 Fall Economic Statement.
The current and past Ontario rates for non-eligible dividends are shown in the following table. This assumes no further legislative changes by Ontario.
The combined federal/Ontario marginal tax rates for eligible and non-eligible dividends and other income are found in the table of Ontario marginal tax rates, which has been revised to reflect the 2018 rate of 3.2863% for non-eligible dividends..
See our tables of non-eligible dividend tax credit rates for all provinces and territories.
Revised: April 22, 2019
Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved. See Reproduction of information from TaxTips.ca