How to Use the Dividend Tax Credit Calculator
Step-by-step guide to the Dividend Tax Credit Calculator. Learn what province, annual income, and investment amount mean and how to interpret eligible vs non-eligible dividends and interest.
Estimated time: 5–10 minutes
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Select your province
Choose your province or territory of residence. Tax rates and dividend tax credits vary by province, so this directly affects your effective tax rate on dividends and interest.
Enter your annual employment income
Enter your expected or actual annual employment (or other) income before adding the dividend or interest amount. This is your 'base' income used to determine your marginal tax bracket. Do not include the investment income you are about to enter in the next field.
Enter the investment income amount
Enter the dollar amount you want to compare—e.g. $1,000 or $20,000. The calculator will show you how much tax you would pay if this amount were received as eligible dividends, as non-eligible dividends, or as interest income (e.g. from a GIC or bond).
Read the three result cards
You'll see three cards: Eligible Dividends (usually the most tax-efficient), Non-Eligible Dividends, and Interest Income. Each shows net after tax, tax owed, and effective rate. Compare how much you keep in each scenario.
Use the detailed breakdown table
The table shows gross-up rate (38% eligible, 15% non-eligible, 0% interest), taxable amount, gross tax, dividend tax credits (which reduce tax for dividends), and net tax payable. This helps you understand why eligible dividends are often taxed at a lower effective rate.
Understand eligible vs non-eligible dividends
Eligible dividends are typically paid by large Canadian public corporations and get a higher gross-up and larger tax credit. Non-eligible dividends are often from small private Canadian corporations (CCPCs) and receive a smaller credit. Your T5 slip will indicate the type.
Verify with a tax professional
This calculator uses current federal and provincial rates for illustration. Your actual tax may depend on other income, deductions, and credits. Use the results for planning only; consult a tax advisor or the CRA for filing.