Dividend Tax Calculator Canada 2026
Compare eligible and non-eligible Canadian dividends: gross-up, federal dividend tax credit, provincial credits, and after-tax cash by province.
By Sammy S. · Founder · AuthorUpdated for 2026
Estimate tax on Canadian dividends
Enter cash dividends, other taxable income, and province. Compare eligible vs non-eligible side by side.
Dividend details
Eligible vs non-eligible · Canada 2026
Salary, pension, interest, etc. — sets your tax brackets. Dividends do not create CPP/EI.
Tax on dividends
Gross-up + federal & provincial DTC
Eligible
38% gross-up · larger credit
Net tax
$639
Non-eligible
15% gross-up · smaller credit
Net tax
$2,028
Eligible advantage
$1,389 less tax
Same cash dividend — eligible keeps more after federal + ON credits.
- Eligible dividends are grossed up by 38% (taxable = 138% of cash).
- Federal DTC 15.0198% and ON DTC 10.0000% of the grossed-up amount (non-refundable).
- Ontario’s non-eligible provincial DTC is 2.9863% through 2026; the 2026 Budget reduces it to 1.9863% for 2027+.
We gross up cash dividends per CRA lines 12000/12010 (138% eligible / 115% other-than-eligible), add them to your other taxable income in our Canada federal + provincial engine (no CPP/EI on dividends), then subtract non-refundable federal DTC (Federal Worksheet 15.0198% / 9.0301%) and provincial DTC (Form 428 rates). Ontario surtax is applied before the provincial DTC, matching Form ON428 practice. Net tax on the dividend is the change in income-tax liability. Rates are validated against TaxTips.ca Ontario combined tables (−8.24%/8.09% lowest, 6.39%/20.28% mid, 39.34%/47.74% top). Educational estimate—not a filed return.
Worked example — Ontario top bracket, $10,000
- Cash dividend
- $10,000
- Other income (ON top bracket)
- $300,000
- Eligible taxable (×1.38)
- $13,800
- Eligible net tax
- $3,934
- Eligible effective rate
- 39.34%
- Non-eligible net tax
- $4,774
- Non-eligible effective rate
- 47.74%
2026 constants
- Eligible gross-up 38%; federal DTC 15.0198%
- Non-eligible gross-up 15%; federal DTC 9.0301%
- Ontario DTC 10.0% eligible / 2.9863% non-eligible
Formulas
- Taxable dividend:
Actual × 1.38 (eligible) or × 1.15 (non-eligible) - Federal DTC:
Taxable dividend × 15.0198% or 9.0301% - Provincial DTC:
Taxable dividend × province DTC rate - Net tax on dividend:
Tax(other + taxable) after DTCs − Tax(other) - Effective rate:
Net tax on dividend ÷ actual cash dividend
Steps
- 1. Gross up cash dividends. Eligible × 1.38; non-eligible × 1.15 (CRA lines 12000 / 12010).
- 2. Compute income tax with and without the dividend. Same Canada engine as our paycheck tools: federal brackets, provincial brackets, Ontario surtax & health premium, Quebec abatement. CPP/EI disabled because dividends are not employment income.
- 3. Apply dividend tax credits. Federal 15.0198% / 9.0301% of grossed-up; provincial rate from Form 428 tables. Credits are non-refundable (floor $0). Quebec: DTC before 16.5% abatement.
- 4. Difference = tax on the dividend. Subtract tax without the dividend from tax after credits. A negative figure means credits offset tax on other income.
Not included
- Foreign dividends and foreign tax credits
- Capital gains, return of capital, or phantom distributions
- Alternative minimum tax (AMT) interactions beyond simple dividend-only cases
- Refundable credits unrelated to DTC (GST/HST credit, CWB, etc.)
- Exact multi-slip T5/T3 aggregation and election to report spouse’s dividends
- Income-tested benefit clawbacks (OAS recovery modelled only via income inflation awareness—not a full OAS calculator)
Sources
- CRA — Lines 12000 and 12010 (taxable dividends / 138% & 115%)
- CRA — Line 40425 (federal dividend tax credit)
- Ontario — Dividend tax credit rates (10% / 2.9863% through 2026)
- TaxTips.ca — Ontario combined marginal rates (incl. dividend columns)
- TaxTips.ca — Eligible dividend tax credit rates (all provinces)
- TaxTips.ca — Non-eligible dividend tax credit rates (all provinces)
Key takeaways — Canadian dividend tax
- CRA requires a 138% taxable amount for eligible dividends and 115% for other-than-eligible (lines 12000 / 12010), then federal DTC of 15.0198% / 9.0301% of that taxable amount (Federal Worksheet line 40425).
- Ontario’s provincial DTC is 10% of grossed-up eligible and 2.9863% of grossed-up other dividends for 2020–2026 (ontario.ca); other Canadian dividends fall to 1.9863% in 2027.
- At Ontario’s top 2026 combined bracket (TaxTips.ca tables, excl. Health Premium), ≈$3,934 tax on $10,000 eligible (39.34%) vs ≈$4,774 on non-eligible (47.74%) — about $840 less tax for eligible.
- Dividend tax credits are non-refundable: unused credit can offset tax on other income but does not create a CRA refund by itself.
- Canadian dividends inside a TFSA or RRSP do not use the gross-up/credit system — asset location matters.
Eligible vs non-eligible dividends
Canadian corporations designate each dividend as eligible or “other than eligible” (commonly called non-eligible). Eligible dividends generally come from income taxed at the general corporate rate — public companies and CCPC income tracked in the general rate income pool (GRIP). Non-eligible dividends usually come from CCPC active business income that claimed the small-business deduction.
Integration is the policy goal: more tax prepaid at the corporate level → larger personal credit. That is why the same $10,000 cash cheque can cost hundreds of dollars less when it is eligible. The corporation’s designation on your T5 (or T3 / T5013) controls which rates apply — you cannot elect the more favourable type yourself.
How the gross-up and dividend tax credit work
Step 1 — gross-up (Income Tax Act s. 82): report 138% of eligible cash or 115% of other-than-eligible cash on line 12000 (CRA). Non-eligible taxable amounts also go on line 12010. If you have no slip, CRA says to multiply the actual amount yourself.
Step 2 — federal DTC (s. 121 / line 40425): claim 15.0198% of the eligible taxable amount and 9.0301% of the non-eligible taxable amount. The Federal Worksheet uses exactly those percentages when slips do not already show the credit.
Step 3 — provincial DTC (Form 428 line 61520): each province applies its own percentage of the same grossed-up figures. Ontario’s worksheet multiplies line 12010 by 2.9863% and the eligible remainder (line 12000 − 12010) by 10%. Credits are non-refundable; Ontario calculates surtax before subtracting the DTC.
This calculator adds the grossed-up amount to your other taxable income in our Canada federal + provincial engine (CPP/EI off, because dividends are not employment income), then subtracts the DTCs. Quebec’s 16.5% federal abatement is applied after the federal credit.
Reading your T5 (and related slips)
T5 Statement of Investment Income is the most common slip. Box 24 = actual eligible dividends; box 25 = taxable (grossed-up) eligible; box 26 = federal DTC on eligible. Box 10 = actual other-than-eligible; box 11 = taxable other-than-eligible; box 12 = federal DTC on those. Enter the taxable totals CRA lists for lines 12000 / 12010; the slip’s DTC boxes usually feed line 40425.
Trusts and funds often issue T3 slips (boxes 32/50 taxable; 39/51 federal DTC). Partnerships use T5013 (boxes 130/133 taxable; 131/134 DTC). Employee profit-sharing plans use T4PS. Foreign dividends do not qualify for the Canadian DTC — they generally go on line 12100 with a possible foreign tax credit instead.
Taxable account vs TFSA / RRSP
Only dividends reported on a personal return get the credit. Inside a TFSA, Canadian dividends are already tax-free — the preferential credit is unused. Inside an RRSP or RRIF, growth is tax-deferred, but withdrawals are ordinary income, so the eligible/non-eligible distinction disappears forever.
Practical asset location: hold Canadian eligible-dividend payers in a non-registered account when you can use the credit; keep interest, foreign dividends, and fully taxable distributions in TFSA/RRSP space when possible. Run the RRSP vs TFSA tool if you are choosing where new savings go.
OAS clawback, AMT, and integration caveats
The gross-up increases net income even though cash received is smaller. That inflated income can affect income-tested benefits — notably Old Age Security recovery tax (clawback) thresholds — and other credits that use net income. A large eligible dividend near the OAS threshold can cost more than the headline dividend tax rate suggests.
Alternative minimum tax (AMT) rules changed for 2024+. TaxTips notes that when Canadian dividends are the only income, AMT generally does not apply at any level for 2025+. Mixed income situations can still interact with AMT — this calculator does not model AMT.
For CCPC owners, “salary vs dividend” is a planning question separate from the eligible label. Non-eligible dividends are the default from small-business-rate income; eligible dividends require GRIP. Ontario’s 2027 cut to the non-eligible provincial credit (to 1.9863%) is a modest reason to prefer paying planned non-eligible dividends in 2026 rather than early 2027 when timing is flexible.
Gross-up and credit rates
| Federal gross-up & DTC (CRA / Federal Worksheet) | ||
|---|---|---|
| Type | Gross-up | Federal DTC |
| Eligible | 38% (×138%) | 15.0198% |
| Other than eligible | 15% (×115%) | 9.0301% |
| Provincial DTC % of grossed-up (2026) | ||
|---|---|---|
| Province | Eligible | Non-elig. |
| Alberta | 8.12% | 2.1800% |
| British Columbia | 12.00% | 1.9600% |
| Manitoba | 8.00% | 0.7835% |
| New Brunswick | 14.00% | 2.7500% |
| Newfoundland and Labrador | 6.30% | 3.2000% |
| Nova Scotia | 8.85% | 1.5000% |
| Ontario | 10.00% | 2.9863% |
| Prince Edward Island | 10.50% | 1.3000% |
| Quebec | 11.70% | 3.4200% |
| Saskatchewan | 11.00% | 2.5190% |
| Northwest Territories | 11.50% | 6.0000% |
| Nunavut | 5.51% | 2.6100% |
| Yukon | 12.02% | 0.6700% |
Provincial rates as % of the grossed-up taxable dividend (TaxTips.ca eligible 2022–26 / non-eligible 2025–26 tables). Nova Scotia non-eligible 1.50% reflects the 2025 Budget.
Ontario 2026 combined marginal rates on actual dividends
Rates match TaxTips.ca combined federal + Ontario tables (surtax included; Ontario Health Premium excluded). Validated with this calculator’s engine.
| Taxable income band | Eligible | Non-eligible |
|---|---|---|
| Up to $53,891 | -8.24% | 8.09% |
| ~$58.5k–$94.9k (mid) | 6.39% | 20.28% |
| Top bracket (over ~$258k) | 39.34% | 47.74% |
Top-bracket effective rates on $10,000 dividends (2026)
Other income $350,000 (or $300,000 for Ontario). Engine estimate; excludes AMT and most refundable credits.
| Province | Eligible | Non-eligible | Gap / $10k |
|---|---|---|---|
| Ontario | 39.34% | 47.74% | $840 |
| British Columbia | 36.54% | 48.89% | $1,234 |
| Alberta | 32.93% | 41.16% | $823 |
| Quebec | 40.11% | 48.70% | $859 |
Worked examples
Ontario top bracket — $10,000
Other income $300,000. Eligible net tax ≈ $3,934 (39.34%); non-eligible ≈ $4,774 (47.74%). Matches TaxTips.ca top combined rates of 39.34% / 47.74%.
Ontario mid brackets — $10,000
Other income $80,000. Eligible ≈ $639 (6.39%) with federal DTC $2,073 + Ontario DTC $1,380. Non-eligible ≈ $2,028 (20.28%).
Ontario lowest band — $1,000 eligible
Other income $40,000. Effective rate -8.24% — credits exceed tax on the dividend itself (TaxTips −8.24% marginal). Non-eligible at the same income: 8.09%. Negative rates offset other tax; they are not refundable.
CRA worksheet — $1,000 eligible with no slip
Taxable amount $1,380 on line 12000. Federal DTC = $1,380 × 15.0198% = $207.27 on line 40425. Ontario adds $1,380 × 10% = $138 on ON428 line 61520.
Myths vs facts
“I pay tax only on the cash dividend I received.”
You report a grossed-up taxable amount (138% or 115%), then claim credits. Cash and taxable amount are different boxes on the T5.
“A negative dividend tax rate means CRA pays me.”
DTCs are non-refundable. A negative effective rate only means credits offset tax on other income — unused credit does not become a cheque.
“My CCPC can always designate eligible dividends.”
Eligible designations need GRIP (income taxed at the general rate). Small-business-rate income typically funds non-eligible dividends only.
“TFSA Canadian dividends still get the DTC.”
No. The credit exists only on a taxable return. TFSA dividends are already tax-free; RRSP withdrawals are ordinary income later.
Glossary
- Eligible dividend
- Dividend designated from general-rate corporate income; 38% gross-up and higher DTC.
- Other than eligible (non-eligible)
- Dividend not designated eligible — typically from CCPC small-business-rate income; 15% gross-up.
- Gross-up
- Inflation of cash dividends to a taxable amount meant to approximate pre-tax corporate earnings (ITA s. 82).
- Dividend tax credit (DTC)
- Non-refundable credit for corporate tax already paid — federal line 40425 and provincial line 61520.
- GRIP
- General Rate Income Pool — CCPC tracking account that supports eligible dividend designations.
- Integration
- Policy aiming for similar total tax whether income is earned personally or via a corporation then paid as dividends.
Who this helps
Investors with Canadian stocks in a taxable account
See how much of each dividend cheque you keep after federal and provincial credits.
CCPC owners
Most small-business dividends are non-eligible — quantify personal tax before paying, and weigh 2026 vs 2027 Ontario timing.
Retirees with modest other income
Eligible dividends can show a low or negative effective rate that offsets tax on pensions (non-refundable).
Anyone reading a T5 for the first time
Map boxes 10–12 and 24–26 to lines 12000, 12010, and 40425 before you file.
Common mistakes
- •Using the cash dividend as taxable income without the 38% or 15% gross-up
- •Expecting a refund when DTC exceeds tax — credits are non-refundable
- •Assuming CCPC owner dividends are eligible without a GRIP designation
- •Holding high eligible-dividend stocks only in a TFSA and interest in a taxable account
- •Ignoring the OAS / net-income effect of the gross-up near clawback thresholds
- •Mixing foreign dividends into the Canadian DTC calculation
Checklist
- Confirm eligible vs other-than-eligible on your T5 (boxes 24/25 vs 10/11)
- Include other taxable income so brackets and Ontario Health Premium (if any) are realistic
- Compare both types before deciding salary vs dividend timing for a CCPC
- Check whether a large gross-up would trigger OAS recovery or other income-tested benefits
- Cross-check asset location with TFSA / RRSP room tools
- For 2026 CCPC planning in Ontario, note the 2027 non-eligible provincial DTC cut
Frequently asked questions
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