What is dividend tax rate for canadian that received these dividend from a canadian company?
Thanks for link.
Someone told me the dividend received from a canadian stock can have lower tax rate compare to normal income.
Lets say in Ontario, but all provinces should have lower tax rate for eligible dividend income.
But how do you define "public" vs "private".
There is no special "tax rate" for dividends.
There IS a Dividend Tax Credit, deducted directly from Federal and Provincial tax, calculated on the respective schedules.
Dividend income is "grossed up" (i.e. multiplied by 1.25 or 1.45) before calculating the credit. The effective rate depends on the taxpayer’s marginal tax rate.
There is no special "tax rate" for dividends.
There IS a Dividend Tax Credit, deducted directly from Federal and Provincial tax, calculated on the respective schedules.
Dividend income is "grossed up" (i.e. multiplied by 1.25 or 1.45) before calculating the credit. The effective rate depends on the taxpayer’s marginal tax rate.
References :
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/120/menu-eng.html
The effective tax rate (after factoring in the dividend tax credit) you will pay depends on several factors:
-whether the dividends are "eligible dividends" or not,
-what province you reside in,
-how much your other sources of income are, which determines which tax bracket you fall into.
For example, a person living in British Columbia whose taxable income from other sources is $41,000 will pay an effective tax rate of approximately 1.3% on "eligible" dividends and 15.2% on non-eligible dividends.
Generally speaking, dividends received from a Canadian public company are eligible dividends and dividends received from a Canadian private company are non-eligible dividends.
References :
If your stock is listed on an exchange like the TSX, then you have stock in a public company. They are called public because they are required to release financial statements on a periodic basis, and these statements are considered to be public documents.
A private company is one that is not listed on an exchange. They are not usually very large companies, and they are normally owned by a small number of people. This does not make them a bad investment, necessarily, but it normally means that the don’t have a huge amount of profit (less than 400,000 dollars for a given year), and thus cannot declare eligible dividends.
Also keep in mind that the dividend tax credit is actually going down for 2010. This corresponds with the federal gov’t plan to reduce the income tax on large corporations.
References :