Dividend Taxes Canada Calculator

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Dividend Taxation: Eligible vs. Non-Eligible Income

Eligible Dividends

Eligible dividends are those paid by Canadian corporations to Canadian residents. They are taxed at a lower rate than regular income, as they are considered a return of capital rather than a gain in income. The eligible dividend tax credit reduces the amount of tax you pay on these dividends.

Tax Rate

The tax rate on eligible dividends depends on your income level. For 2023, the tax rates are as follows: * 0% for income up to $50,197 * 15% for income between $50,198 and $100,392 * 21% for income over $100,392

Non-Eligible Dividends

Non-eligible dividends are those paid by foreign corporations to Canadian residents, or by Canadian corporations to non-residents. They are taxed at the same rate as regular income, but you may be able to claim a foreign dividend tax credit if the dividends were paid from a foreign corporation.

Tax Rate

The tax rate on non-eligible dividends is the same as your marginal income tax rate. For 2023, the marginal tax rates are as follows: * 15% for income up to $50,197 * 20.5% for income between $50,198 and $100,392 * 26% for income between $100,393 and $155,625 * 29% for income between $155,626 and $221,708 * 33% for income over $221,708

Using a Tax Calculator

To get an estimate of how much tax you will pay on your dividends, you can use a tax calculator like the ones provided by the Canada Revenue Agency (CRA) or various financial institutions. These calculators can help you determine your tax bracket and the amount of tax you will owe.

It is important to note that the tax rates and rules discussed in this article are for Canadian residents. Non-residents may be subject to different tax rates and rules.