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Homeโ€บCanadaโ€บDividend Tax Calculator

Dividend Tax Calculator Canada 2025

Calculate your tax on eligible and non-eligible dividends with gross-up, federal and provincial dividend tax credits. Compare dividend vs salary for corporate owners.

$
Total dividends received (actual amount, before gross-up)
Eligible = public corp or general-rate CCPC. Non-eligible = small business CCPC.
Your province of residence on Dec 31
$
Employment, self-employment, pension, etc. Affects your marginal tax rate.
โ€”
Estimates only. Actual tax depends on your full return, provincial surtaxes, and CRA assessment.

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How to Use This Calculator

Tab "Dividend Tax"

Enter your dividend amount (the actual cash received), select eligible or non-eligible, and choose your province. The calculator applies the gross-up, computes federal and provincial tax, then subtracts dividend tax credits to show your net tax and effective rate. Add other income under "More options" to see the impact of your marginal rate.

Tab "Eligible vs Non-Eligible"

Enter the same dividend amount and see a side-by-side comparison of how that amount would be taxed as eligible vs non-eligible dividends. Useful when you have flexibility in how your corporation designates dividends.

Tab "Dividend vs Salary (Corp Owner)"

Enter the amount to extract from your corporation and your corporate income (to determine small business vs general rate). The calculator compares three methods: paying yourself a salary, eligible dividends, or non-eligible dividends โ€” showing corporate tax, personal tax, CPP, and net in pocket for each.

The Formulas

Dividend gross-up mechanism:
Eligible: Taxable amount = Dividend × 1.38 (38% gross-up)
Non-eligible: Taxable amount = Dividend × 1.15 (15% gross-up)

Federal dividend tax credit (DTC):
Eligible: 15.02% of grossed-up amount
Non-eligible: 9.03% of grossed-up amount

Provincial DTC: varies by province (e.g., Ontario: 10% eligible, 2.9863% non-eligible)

Net tax on dividends:
= (Federal tax + Provincial tax on grossed-up income) − (Federal DTC + Provincial DTC)

Effective rate: Net tax ÷ Actual dividend amount × 100%

Why the gross-up?
The gross-up approximates the corporation's pre-tax income. The DTC then refunds the corporate tax already paid, integrating corporate and personal tax systems to avoid double taxation.

Example

Sarah โ€” $50,000 Eligible Dividends, $80,000 Salary, Ontario

Sarah earns $80,000 in employment income and receives $50,000 in eligible dividends from her investment portfolio.

Dividend amount$50,000
Gross-up (38%)$19,000
Grossed-up amount$69,000
Total taxable income$149,000 ($80K + $69K)
Federal tax on dividends~$14,766
Ontario tax on dividends~$7,702
Federal DTC (15.02%)−$10,364
Ontario DTC (10%)−$6,900
Net tax on dividends~$5,204
Effective rate~10.4%

Without the DTC, Sarah would pay ~$22,468 in tax on those dividends. The gross-up/credit mechanism saves her ~$17,264.

Frequently Asked Questions

No. The dividend type is determined by the corporation paying it. Eligible dividends come from corporations that paid tax at the general rate (or are public companies). Non-eligible dividends come from CCPCs using the small business deduction. A corporation can only designate dividends as eligible if it has a positive General Rate Income Pool (GRIP) balance.
Yes. All dividend income must be reported on your tax return, whether or not you received a T5 slip. Financial institutions issue T5 slips for dividends over $50, but you are required to report all amounts. Report the taxable (grossed-up) amount on your return โ€” the T5 shows both the actual and taxable amounts.
Federal dividend tax credits are non-refundable โ€” they can reduce your federal tax to zero but cannot create a refund on their own. However, some provinces (like Ontario) have refundable dividend tax credits that can generate a refund. If your only income is dividends and it's below a certain threshold, you may effectively pay zero tax or even receive a small refund depending on your province.
There's no universal answer. Salary creates RRSP contribution room (18% of earned income) and CPP pension credits, and is deductible to the corporation. Dividends may result in slightly less total tax in some cases but provide no RRSP room or CPP. Most accountants recommend a blend: enough salary to maximize RRSP room and CPP, with the remainder as dividends. The optimal mix depends on your income level, province, and personal circumstances.
No. Dividends inside a TFSA are completely tax-free โ€” no gross-up, no tax, no reporting. Dividends inside an RRSP are tax-deferred and do not receive the dividend tax credit treatment; when withdrawn, they are taxed as regular income at your marginal rate. This means the DTC advantage is lost inside an RRSP, which is why many advisors suggest holding dividend-paying stocks in a non-registered account and interest-bearing investments in the RRSP.

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