Canadian dividend tax calculator (eligible dividends)
Your slip says you earned more than you got. That is the gross-up. Put in your dividend and your rates and see every step, from the gross-up to the tax you actually owe.
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How it works: Canada taxes a Canadian dividend in three moves. First it grosses it up: an eligible dividend is taxed as if it were 38% bigger, a non-eligible one 15% bigger. Then it taxes that bigger number at your marginal rates. Then it hands back a dividend tax credit, a slice of the grossed-up amount, once federally and once from your province. Net tax = (grossed-up amount × your federal rate − the federal credit) + (grossed-up amount × your provincial rate − the provincial credit). The federal rates come from the CRA. The provincial box fills in only where an official site confirms the rate, with the year it applies to when the source gives one (some are last year's rate, and the box says so); anywhere else, type your province's rate. Your marginal rates are yours to type, because they depend on your whole income.
Why the gross-up is not a penalty
Seeing your dividend "grow" on paper feels like being taxed on money you never got. It is the first half of a trade. The company already paid corporate tax on the profit behind the dividend. The gross-up rebuilds that pre-tax profit, and the credit then gives back roughly the tax the company already paid. The result: at the same marginal rate, a Canadian eligible dividend is often taxed less than the same dollars of interest or a US dividend, which get no gross-up and no credit. Run the default example and compare the two lines at the bottom. For how this fits with dates, accounts and the rest, start with dividend investing explained.
Where the credit can't help you
The credit only works on Canadian dividends in a taxable account. Inside a TFSA or RRSP the dividend isn't taxed when it's paid, so the credit does nothing there. US dividends never get it at all. If a big credit wipes out the tax on the dividend, the leftover can lower the tax on your other income, but it can't create a refund on its own. If you also sell options, the same marginal rates drive how option premiums are taxed in Canada.
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