Taxation of Investment Income in Canada
In Canada, the federal and provincial governments tax individuals and corporations on income earned and on capital gains. Individuals must declare and pay tax on: employment income; net business income from a proprietorship or partnership; investment income (including interest, dividends, rents and royalties); taxable capital gains from the disposition of capital property; and pension income (including income received from company pensions, government pensions and individual plans such as RRSPs and RRIFs).
The federal government applies four tax brackets on income. For 2009, the following brackets were in effect:
| Income Range |
Federal Tax Rate |
| 0 - $40,726 |
15% |
| $40,726 - $81,452 |
22% |
| $81,452 - $126,264 |
26% |
| >$126,264 |
29% |
Learn more and follow taxation examples online.
Problems to be taken up in the next e-newsletter
I would like to leave you with three questions pertaining to this area that will be answered in the next e-newsletter. These questions deal with the 2009 tax year, as things will change in 2010 with respect to Canadian dividends for public corporations.
Click here for questions to be taken up in the next e-newsletter.
Good luck on your studies.
Sincerely,
Ron Foran, CFP, CLU, CFA, FCSI
President, Foran Financial Institute.
