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.