No fee everyday banking
Set up direct deposit and skip the monthly fee. Free to open, and the Easy plan has no monthly fee. Worth doing if you will actually move your pay or your CRA deposits over, not if the card sits unused. Code BREMO2026.
Eligible and non-eligible dividend tax rates in every province — plus dividend vs salary comparison
Dividends from Canadian corporations are taxed differently than employment income in every province. The dividend tax credit system is designed to prevent double taxation — since corporations already paid corporate tax before distributing dividends. Understanding how dividends are taxed provincially is essential for business owners deciding how to extract income, and for investors comparing after-tax returns on Canadian equities versus other income types.
When you receive a Canadian eligible dividend, you must gross it up by 38% for tax purposes (the "grossed-up" dividend is reported as income). You then receive a federal dividend tax credit of 15.0198% of the grossed-up amount, plus a provincial dividend tax credit that varies by province. For non-eligible dividends (typically from CCPCs), the gross-up is 15% and federal credit is 9.0301%.
| Province | Top Rate on Eligible Dividends | Top Combined Marginal (Employment) | Dividend Advantage |
|---|---|---|---|
| Alberta | 34.31% | 48.00% | 13.69% lower |
| Saskatchewan | 30.33% | 47.50% | 17.17% lower |
| Ontario | 39.34% | 53.53% | 14.19% lower |
| British Columbia | 36.54% | 53.50% | 16.96% lower |
| Manitoba | 37.78% | 50.40% | 12.62% lower |
| Quebec | 40.11% | 53.31% | 13.20% lower |
| New Brunswick | 37.33% | 52.50% | 15.17% lower |
| Nova Scotia | 41.58% | 54.00% | 12.42% lower |
| Province | Top Rate on Non-Eligible Dividends | Notes |
|---|---|---|
| Alberta | 42.31% | Higher than eligible — small biz income |
| BC | 48.89% | Close to employment rate |
| Ontario | 47.74% | Includes surtax effect |
| Saskatchewan | 42.34% | Moderate |
| Manitoba | 46.67% | Relatively high |
| Quebec | 47.14% | High — affects CCPC planning |
| Nova Scotia | 48.28% | Highest for non-eligible |
You can't avoid provincial taxes, but you can eliminate banking fees. KOHO is free forever — save $200+/year vs the big banks and keep more after-tax dollars in your pocket.
Get KOHO Free — Code BREMO2026For a business owner in Ontario earning $150,000 from a CCPC, the choice between salary and dividends involves complex trade-offs. Salary: deductible to the corporation, creates RRSP room, subject to CPP, taxed at full marginal rates. Eligible dividends (if corporate income was taxed at general rate): taxed at ~39.34% top rate, no CPP, no RRSP room. A common strategy is a salary-dividend blend: pay enough salary to maximize RRSP contributions ($32,490 room requires ~$180,500 salary), then take the remainder as dividends for overall tax efficiency.
At lower income levels, eligible dividends from Canadian corporations can actually result in negative provincial tax — meaning the dividend tax credit exceeds your provincial tax otherwise owing. In Alberta, an individual earning only $50,000 in eligible dividends may have zero or near-zero provincial tax after the Alberta dividend tax credit of 10% of the grossed-up amount. This makes eligible dividend income particularly attractive for lower-income investors or retirees drawing from non-registered accounts.
Compare salary, dividends, and capital gains across provinces.
Canada Tax Calculator →Also see: Provincial Tax on Capital Gains | Alberta Income Tax 2026 | Ontario Income Tax 2026