Dividend Rates And Tax Tables

by Tax Guy - Burlington Accountant on March 30, 2009 Print This Post Print This Post

Question: On your tax rate page you show 0% tax on dividends for the lowest income bracket. Other tables I’ve seen show around -7%. What would account for the difference? My mother thought that because she is in the lowest income bracket, her dividends would actually generate a tax credit. Is that wrong?

The dividend tax credit is non-refundable which means that the credit may only be used to reduce taxes payable to zero.  Any excess does not create a refund of tax that was never payable.

It is possible to transfer dividends to a spouse if the spouse is entitled to the spousal credit.  In that case, the spouse claims the dividends and the associated credit.  This transfer is not always beneficial and taxes should be calculated both in the hands of both spouses to determine which combination provides overall lower tax bill.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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