Canadian Dividend Tax Calculator
Tax on Canadian eligible and non-eligible dividends, with the gross-up and both dividend tax credits
Your dividends
Salary, pension, interest and anything else already in your taxable income. Dividends stack on top of it, so this decides which bracket they land in.
Cash received from most Canadian public companies. Box 24 on your T5.
Usually paid by a small business corporation on income that got the small business deduction. Box 10 on your T5.
Gross-up and taxable income
Tax and credits
Your rates
The same money as interest or salary
What $10,000 would cost you if it arrived as interest from a GIC or savings account instead of as a dividend. Salary would cost slightly more again, because it also attracts CPP and EI.
| Received as | Tax | You keep | Effective rate |
|---|---|---|---|
| Eligible dividends | $638.97 | $9,361.03 | 6.39% |
| Non-eligible dividends | $2,027.86 | $7,972.14 | 20.28% |
| Interest or salary | $2,965.00 | $7,035.00 | 29.65% |
Extra after-tax dollars versus the same amount as interest
After-tax result by income type
How Canadian dividends are taxed
A Canadian dividend is paid out of income the company has already paid corporate tax on. The gross-up and dividend tax credit exist to stop that income being taxed twice, which is why a dividend costs you less tax than the same amount of interest.
The gross-up and the credit
The process runs in three steps. First the cash dividend is grossed up: eligible dividends by 38%, non-eligible by 15%. The grossed-up figure is an estimate of the pre-tax corporate profit the dividend came from, and it is the amount that enters your taxable income. A $10,000 eligible dividend adds $13,800 to your income. Second, that grossed-up amount is taxed at your ordinary rates, on top of whatever other income you have. Third, you claim two dividend tax credits, a federal one and a provincial one, each a fixed percentage of the grossed-up amount. Federally that is 15.0198% for eligible dividends and 9.0301% for non-eligible ones. The provincial rate depends on where you live and varies a lot: British Columbia gives 12% on eligible dividends, Newfoundland and Labrador gives 6.3%. The credits reduce your total tax bill, not just the tax on the dividend line. In the lower brackets the credit can be larger than the tax on the dividend itself, which is why published marginal rates on eligible dividends go to zero and below for modest incomes.
Eligible versus non-eligible
Eligible dividends come from corporate income taxed at the general rate. Because more corporate tax was already paid, the gross-up and the credit are both larger, and the dividend costs you less. Nearly every dividend from a Canadian public company on the TSX is eligible. Non-eligible dividends, sometimes called ordinary dividends, come from income that received the small business deduction. Less corporate tax was paid, so the gross-up and credit are smaller and your personal tax is higher. If you own a Canadian-controlled private corporation and pay yourself dividends, these are usually the ones you receive. Your T5 slip separates them: box 24 and 25 for eligible, box 10 and 11 for non-eligible.
What the gross-up quietly costs you
The gross-up inflates your net income even though you never received the extra money, and several income-tested benefits are calculated on net income. Old Age Security clawback, the Canada Child Benefit, the age credit and the GST/HST credit are all measured against a number the gross-up has pushed up. For a retiree near the OAS clawback threshold this is not theoretical: $10,000 of eligible dividends adds $13,800 to the income that the clawback is measured against. The dividend tax credit does nothing to reverse that, because the clawback is calculated before credits. The fix, where it is available, is to hold dividend-paying Canadian shares inside a TFSA or RRSP. There is no gross-up, no credit, and no effect on net income.
Assumptions
This calculator applies the federal and provincial brackets, the basic personal amounts, Quebec's 16.5% federal abatement and the Ontario surtax. It does not model CPP, EI, other credits, or provincial surtaxes outside Ontario, so it is a good estimate of the tax on the dividends rather than a complete return. The salary comparison shows income tax only. Real salary also attracts CPP and EI contributions, so the gap between a dividend and a salary is wider than shown. Only Canadian dividends qualify. Dividends from US and other foreign companies get no gross-up and no credit; they are taxed as ordinary income and may also carry foreign withholding tax.
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Frequently Asked Questions
Last updated: July 2026
In three steps. The cash dividend is grossed up (38% for eligible dividends, 15% for non-eligible), the grossed-up amount is added to your taxable income and taxed at your ordinary rates, and then you claim a federal and a provincial dividend tax credit calculated as a fixed percentage of that grossed-up amount. The credits exist because the paying corporation already paid tax on the income, so the system is trying not to tax it twice.
Eligible dividends come from corporate income taxed at the general rate, so more corporate tax was already paid; they carry a 38% gross-up and a larger credit and cost you less personal tax. Non-eligible dividends come from income that received the small business deduction, carry a 15% gross-up and a smaller credit, and cost you more. Almost every dividend from a Canadian public company is eligible; dividends from your own small corporation usually are not. Your T5 slip separates them.
Reviewed by Alexandre Bernier, CFP®, CIM®
Educational tool - estimates only. Not individualized financial, investment, tax, or legal advice. Using it does not create an advisor-client relationship. Rules and figures change; verify against current CRA sources and consult a qualified professional. Editorial policy →