A dividend is a distribution of a corporation's after-tax profits to its shareholders, taxed at preferential personal rates through the dividend tax credit.
Dividends are one of the two main ways an owner takes money out of a corporation, the other being salary. They are paid from income the company has already paid corporate tax on, and are not deductible to the company. In the shareholder's hands they are taxed at lower rates than regular income because of the dividend tax credit, which accounts for the tax the corporation already paid.
Canada distinguishes eligible dividends (from income taxed at the general corporate rate) and non-eligible dividends (from income taxed at the small business rate), each with its own gross-up and credit. Dividends paid to family members can be caught by the TOSI rules.
Your corporation pays $50,000 in dividends to you from its after-tax retained earnings. You report the grossed-up amount on your personal return and claim the dividend tax credit, resulting in less personal tax than the same $50,000 taken as salary.
Primary source
- Income Tax Act, s. 82 Taxable dividends received
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Property tax is an annual municipal levy on real estate, charged by the city or town where the property sits rather than by the CRA. The bill is the assessed value of the property multiplied by the tax rate the municipality sets each year, and it funds local services such as roads, waste collection, policing and the education portion the province adds. Assessed value is set by a provincial assessment authority, so it is not the price you paid.
Canada taxes income in graduated brackets, so only the income above a threshold is taxed at that bracket's higher rate and moving up a bracket never reprices the income below it. There is one federal set of brackets and a separate set for each province and territory, and the thresholds are indexed to inflation every year. Look up the current figures for your province on the CRA rate tables rather than relying on an older list.
Canada runs three systems. The federal GST is 5% for 2026 and applies nationally. Five participating provinces fold a provincial share into one harmonised rate: 13% in Ontario, 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island, and 14% in Nova Scotia since 1 April 2025. Others add their own tax to the 5% GST, giving 12% in British Columbia and Manitoba, 11% in Saskatchewan and 14.975% in Quebec. Alberta and the territories charge 5% only.
Canada uses a progressive system, so only the income falling inside a bracket is taxed at that bracket's rate. Moving into a higher bracket never raises the tax on the income below it. You face a federal set of brackets plus a provincial or territorial set, and both are indexed most years. Credits, starting with the basic personal amount, then reduce the calculated tax. Look up the brackets for the specific tax year before planning around them.
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Reviewed and fact-checked by Udit Gupta
Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. Big 4 trained at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia, he founded his accounting practice in 2014 to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
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