Dividend Tax Calculator
Calculate the tax on Canadian dividends, including the gross-up, federal and provincial dividend tax credits, and your effective dividend tax rate.
Dividend Details
Dividend Tax Summary
Effective Rate on Dividend
6.0%
Marginal Dividend Rate
16.0%
How it works: Canadian dividends are "grossed up" to reflect pre-tax corporate income, then you receive a Dividend Tax Credit (DTC) to offset the tax. Eligible dividends (from public corporations) get a 38% gross-up and a larger DTC, resulting in lower effective tax rates. Non-eligible dividends (from CCPCs) get a 15% gross-up and a smaller DTC. At low income levels, the DTC can exceed the tax on the dividend, resulting in zero net tax.
Dividend Tax in Canada
Canada uses a gross-up and tax credit mechanism for dividends. The dividend is "grossed up" to approximate the corporation's pre-tax income, then a Dividend Tax Credit (DTC) is applied to account for taxes already paid at the corporate level.
Eligible dividends: Paid by public corporations and large CCPCs from income taxed at the general corporate rate. They receive a 38% gross-up and a larger DTC, resulting in a lower effective tax rate for the shareholder.
Non-eligible dividends: Paid from income taxed at the small business rate. They receive a 15% gross-up and a smaller DTC, resulting in a higher effective tax rate.
Low-income advantage: At low income levels, the dividend tax credit can exceed the tax on the grossed-up dividend, resulting in zero net tax on dividend income.