2014 TAX PLANNING
Quick Reference Guide
2014 Top Marginal Tax Rates (Federal and Provincial Rates Combined)*
Provincial/Territorial Income Tax Rates*
(current to Jan. 2014)
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
New Brunswick
Nova Scotia
Prince Edward
Island
Newfoundland
& Labrador
Yukon
Northwest
Territories
Nunavut
First $37,606
$37,606 – $75,213
$75,213 – $86,354
$86,354 – $104,858
$104,858 – $150,000
$150,000 and over
10% of taxable income
First $43,292
$43,292 – 123,692
$123,692 and over
First $31,000
$31,000 – $67,000
$67,000 and over
First $40,120
$40,120 – $80,242
$80,242 – $514,090
$514,090 and over
First $41,495
$41,495 – $82,985
$82,985 – $100,970
$100,970 and over
First $39,305
$39,305 – $78,609
$78,609 – $127,802
$127,802 and over
First $29,590
$29,590 – $59,180
$59,180 – $93,000
$93,000 – $150,000
$150,000 and over
First $31,984
$31,984 – $63,969
$63,969 and over
First $34,254
$34,254 – $68,508
$68,508 and over
First $43,953
$43,953 – $87,907
$87,907 – $136,270
$136,270 and over
First $39,808
$39,808 – $79,618
$79,618 – $129,441
$129,441 and over
First $41,909
$41,909 – $83,818
$83,818 – $136,270
$136,270 and over
5.06%
7.70%
10.50%
12.29%
14.70%
16.80%
11.00%
13.00%
15.00%
10.80%
12.75%
17.40%
5.05%
9.15%
11.16%
13.16%
16.00%
20.00%
24.00%
25.75%
9.68%
14.82%
16.52%
17.84%
8.79%
14.95%
16.67%
17.50%
21.00%
9.80%
13.80%
16.70%
7.70%
12.50%
13.30%
7.04%
9.68%
11.44%
12.76%
5.90%
8.60%
12.20%
14.05%
4.00%
7.00%
9.00%
11.50%
*The table includes and assumes all proposed rates from
2013 provincial budgets, where applicable, have been passed.
Interest/Foreign Dividends
Capital Gains**
Eligible Dividends
Non-Eligible Dividends
45.80%
39.00%
44.00%
46.40%
49.53%
49.97%
46.84%
47.37%
50.00%
42.30%
42.40%
43.05%
40.50%
22.90%
19.50%
22.00%
23.20%
24.76%
24.99%
23.42%
23.68%
25.00%
21.15%
21.20%
21.52%
20.25%
28.67%
19.29%
24.81%
32.26%
33.82%
35.23%
27.35%
28.71%
36.06%
22.46%
15.93%
22.81%
27.56%
37.98%
29.36%
35.32%
40.77%
40.14%
39.79%
36.02%
38.74%
39.07%
31.01%
32.03%
30.72%
31.19%
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
New Brunswick
PEI
Nova Scotia
Newfoundland/Labrador
Yukon
NWT
Nunavut
*Rates include federal and provincial combined marginal tax rates, including provincial surtaxes.
**The capital gains rate for qualifying securities donated to registered charities in-kind is 0%.
RRSP/TFSA Contribution Limits
18% of previous year’s earned
income to a maximum of:
2014 – $24,270
2015 – $24,930
TFSA Contribution Limit
2014 – $5,500
Withholding Tax Rates for
RRSP/RRIF Withdrawals
Quebec
All Other Provinces
21%
26%
31%
10%
20%
30%
Up to $5,000
$5,001 – $15,000
Over $15,000
2014 Federal Income Tax Rates
First $43,953
15.00%
$43,953 – $87,907
22.00%
$87,907 – $136,270
26.00%
$136,270 and over
29.00%
Basic personal exemption
$11,138
Attribution Rules
Recipient
Gift
Spouse or Partner
Income
Attributed to “giftor”
Capital Gains
Attributed to “giftor”
2nd Generation Income No attribution
Child under 18
Income
Attributed to “giftor”
Capital Gains
No attribution
2nd Generation Income No attribution
Child over 18
Income
No attribution
Capital Gains
No attribution
Corporation (excluding small business corporation)
Attribution may result if
reason for transfer is to confer
a benefit on a family member
and reduce family tax payable
No or low
interest loan
Loan at prescribed
or commercial rate
Attributed to lender
Attributed to lender
No attribution
No attribution
No attribution
No attribution
Attributed to lender
No attribution
No attribution
No attribution
No attribution
No attribution
No attribution*
No attribution
No attribution
No attribution
Attribution may result if
reason for transfer is to confer
a benefit on a family member
and reduce family tax payable
No attribution
*Normally, loan must be for education, investment in a house, or to earn business income to avoid attribution.
Note: Attribution generally ceases on death or in cases of non-residency.
2014 TAX PLANNING
2014 Employment Insurance (EI) Premiums
All provinces/territories except Quebec
Quebec
Maximum Yearly Insurable Earnings
$48,600
$48,600
Employee’s Premium Rate
1.88%
1.53%
Employer’s Premium Rate
2.63%
2.14%
Maximum Yearly Employee Premium
$913.68
$743.58
Maximum Yearly Employer Premium
$1,279.15
$1,041.01
2014 Canada Pension Plan Premiums
All provinces/territories except Quebec
Quebec*
Maximum Pensionable Earnings
$52,500
$52,500
Basic Exemption
$3,500
$3,500
Maximum Contributory Earnings
$49,000
$49,000
Employee and Employer Rate
4.95%
5.175%
Maximum Employee/Employer contribution
$2,425.50
$2,535.75
Maximum Self-employed contribution
$4,851.00
$5,071.50
RRIF Minimum Withdrawals
Age
Withdrawal
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
3.33%
3.45%
3.57%
3.70%
3.85%
4.00%
4.17%
4.35%
4.55%
4.76%
5.00%
7.38%
7.48%
7.59%
7.71%
7.85%
7.99%
8.15%
8.33%
Age
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94+
Withdrawal
8.53%
8.75%
8.99%
9.27%
9.58%
9.93%
10.33%
10.79%
11.33%
11.96%
12.71%
13.62%
14.73%
16.12%
17.92%
20.00%
*In Quebec contributions are made to the Quebec Pension Plan.
2014 CPP and QPP Retirement Benefit
Maximum monthly benefit (assuming payments begin at age 65): $1,038.33
2014 Old Age Security (OAS) Payment Rates (current to Jan. 2014)
Maximum Monthly Benefit
$551.54
Maximum Annual Income
Pensioners with a net income of $71,592 or more are subject
to OAS clawback. Clawback rate is 15% for each dollar beyond
$71,592. OAS is fully eliminated once net income reaches $115,716.
P105
Students and Income Tax
P113
Gifts and Income Tax
P151
Canadian Residents Going
Down South
RC4092Registered Education Savings
Plans (RESPs)
RC4110 Employee or Self-employed?
RC4112 Lifelong Learning Plan (LLP)
RC4135 Home Buyers Plan (HBP)
RC4142 Tax Advantages of Donating
to Charity
RC4169Tax Treatment of Mutual Funds
for Individuals
RC4466
Tax Free Savings Account Guide
for Individuals
Effective Tax Rate: Actual rate of tax
paid by taxpayer. Considers deductions,
credits and graduated tax brackets.
Mackenzie Tax Brochures
RC4177 Death of an RRSP Annuitant
RC4178 Death of a RRIF Annuitant
RC4188 What You Should Know About Audits
T4002 Business and Professional Income
T4011
Preparing Returns for Deceased Persons
T4036 Rental Income
T4037
Capital Gains
T4040RRSPs and Other Registered
Plans for Retirement
T4055 Newcomers to Canada
T4056 Emigrants and Income Tax
T4058 Non-Residents and Income Tax
For more information, please visit mackenzieinvestments.com/taxestate
Telephone: 416-967-2000 or 1-888-653-7070 Fax: 416-922-5660 or 1-866-766-6623
180 Queen Street West, Toronto, ON M5V 3K1
13310
Marginal Tax Rate: Tax rate applicable
to last dollar of income earned. Does
not consider deductions and credits
available to taxpayer.
mackenzieinvestments.com/taxestate
•Education Planning
•Income Splitting
•Guide to Tax-Efficient Investing: Corporate
Class Funds – Series T
•Mackenzie Charitable Giving Fund
•Making a Challenge Less Challenging
(Disability Benefits)
•Strategies for Trusts in Tax and Estate Planning
•Tax-Free Savings Accounts
•Registered Disability Savings Plan
•Tax & Estate Planning for Business Owners kit
•Canadians & US Tax Estate
TE1005 1/14
Commonly Used CRA Guides
Marginal versus Effective Tax
Rates – What’s the Difference?
2014 ESTATE PLANNING
Quick Reference Guide
Provincial probate taxes
• Probate is the process of having a will validated by the courts.
• Probate taxes vary considerably from province to province, but in
most cases these taxes are a percentage of the value of the estate
being probated.
Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland
& Labrador
Northwest Territories
Nova Scotia
Nunavut
Ontario
Prince Edward Island
Quebec
Saskatchewan
Yukon
Estate Size
Probate Tax
$10,000 or under
$10,001 – $25,000
$25,001 – $125,000
$125,001 – $250,000
Over $250,000
$25,000 or under
$25,000 – $50,000
Over $50,000
$10,000 or under
Over $10,000
$5,000 or under
$5,001 – $10,000
$10,001 – $15,000
$15,001 – $20,000
Over $20,000
$1,000 or under
Over $1,000
$10,000 or under
$10,001 – $25,000
$25,001 – $125,000
$125,001 – $250,000
Over $250,000
$10,000 or under
$10,001 – $25,000
$25,001 – $50,000
$50,001 – $100,000
Over $100,000
$10,000 or under
$10,001 – $25,000
$25,001 – $125,000
$125,001 – $250,000
Over $250,000
$1,000 or under
$1,000 – $50,000
Over $50,000
$10,000 or under
$10,001 – $25,000
$25,001 – $50,000
$50,001 – $100,000
Over $100,000
No probate fees
All estates
$24,999 and under
$25,000 and over
$25
$100
$200
$300
$400 (Maximum)
$0
$200 + $6 per $1,000 over $25,000
$350 + $14 per $1,000 over $50,000
$70
$70 + $7 per $1,000 over $10,000
$25
$50
$75
$100
$5 per $1,000
$60
$60 + $0.5 per $100 over $1,000
$25
$100
$200
$300
$400
$83.10
$208.95
$347.70
$973.45
$973.45 + $16.45 per $1,000 over $100,000
$25
$100
$200
$300
$400
Nil
$5 per $1,000
$250 + $15 per $1,000 (1.5%)
$50
$100
$200
$400
$400 + $4 per $1,000 (0.4%)
N.A.
$7 per $1,000 (0.7%)
$0
$140
Source: EY, Managing Your Personal Taxes 2013-14.
Due date for filing tax returns for deceased individuals
Period when death occurred
January 1 to October 31
November 1 to December 31
Due date for the return
April 30 of the following year
Six months after the date of death
If the deceased or the deceased’s spouse or common-law partner was selfemployed, the following due dates normally apply:
Period when death occurred
January 1 to December 15
December 15 to December 31
Due date for the return
June 30 of the following year
Six months after the date of death
*Any balance owing would be due the later of April 30th the year after death or six months after death.
RRSP and RRIF at death
The deceased is deemed to have received the fair market value of all
property held in a Registered Retirement Savings Plan (RRSP) or Registered
Retirement Income Fund (RRIF) at the date of death. No amount is included
in the deceased’s income if the designated beneficiary or heir is an “eligible
beneficiary” and certain conditions are met. An eligible beneficiary who acquires
rights in an RRSP or an RRIF has several options for deferring the income tax on
those amounts.
The following table summarizes the rules:
Heir/Beneficiary
Spouse
Child or grandchild
financially dependent
because of an infirmity
Child or grandchild
financially dependent not
because of an infirmity
Other
Amount
taxable
at death
Nil1
Transferable to:1
RRSP/RRIF
Annuity
Yes
Yes
Nil1
Yes
Yes
Nil1
No
Yes2
FMV
No
No
1
Certain terms and conditions may apply.
2
The annuity may provide for payments for a period of not more than 18 years, less the age of the child or grandchild
when the annuity is purchased. Annuity payments must start no later than one year after the purchase.
Transfer from an RRSP or RRIF to an RDSP
It is possible to transfer funds held in an RRSP or an RRIF at the time of death
to a Registered Disability Savings Plan (RDSP) of a child or grandchild who was
financially dependent on the deceased because of a mental or physical disability.
However, the amount transferred must not exceed the beneficiary’s RDSP
contribution room of $200,000, and is not eligible for the Canadian Disability
Savings Grant.
Transfer from an RRSP or RRIF to a Lifetime Benefit Trust
It is possible to transfer funds held in an RRSP or an RRIF at the time of death
to a Lifetime Benefit Trust (LBT). A LBT is a trust established for the benefit of
a child or grandchild who was financially dependent on the deceased because
of a mental or physical disability. The LBT is a personal trust under which a
surviving but mentally infirm spouse of a deceased individual or a mentally
infirm child or grandchild of a deceased individual is the sole beneficiary of any
income or capital of the trust. The trustees may pay amounts out of the trust to
the beneficiary but the trustees are not required to pay out all the income of the
LBT to the beneficiary. A Qualifying Trust Annuity (QTA) can be purchased by the
LBT with the RRSP/RRIF proceeds coming from the deceased spouse, parent, or
grandparent. The QTA must be for the life of the taxpayer a fixed term equal to
90 years minus the age of the taxpayer who is the sole beneficiary of the LBT.
Source: Tax Planning Guide 2013-2014, Raymond Chabot Grant Thornton
2014 ESTATE PLANNING
Provincial intestacy rules
• “Intestate” is the term used when an individual dies without a will.
• Each province has its own laws as to how assets are to be divided when someone dies without a will.
Spouse and One Child
Spouse and Children
Alberta(1a)
If all children are also children of surviving spouse, entire estate goes to spouse; if any of the children are not also children of the surviving spouse,
the spouse gets the greater of $150,000 or 50% of the value of the estate, and the children receive the remainder of the estate.
British Columbia(1h)
If all children are also children of the surviving spouse, first $300,000(6) + half of the remainder goes to spouse; if any of the children are not also children
of the surviving spouse, the first $150,000 go to the spouse(6), 1/2 of the balance goes to the spouse, 1/2 of the balance of the balance to the children.
Manitoba(1g)
If all children are also children of surviving spouse, entire estate goes to spouse; if any of the children are not also children of surviving spouse,
greater of $50,000 and half of estate goes to spouse(5). Remainder of estate is split 1/2 and 1/2 between spouse and children.
New Brunswick
Marital property to spouse; balance split equally(1)
Marital property to spouse; 1/3 of the balance to spouse; 2/3 of the balance to children(1)
Nfld and Labrador
Split equally
1/3 to spouse; 2/3 to children(1)
(1)
NWT/Nunavut(1e)
First $50,000 to spouse, balance split equally(1, 2)
First $50,000 to spouse; 1/3 balance to spouse, 2/3 balance to children(1, 2)
Nova Scotia(1c)
First $50,000 to spouse; balance split equally (1)
First $50,000 to spouse (2); 1/3 of the balance to spouse; 2/3 of the balance to children(1)
Ontario
First $200,000 to spouse; balance split equally(1, 4)
First $200,000 to spouse; 1/3 of the balance to spouse; 2/3 of the balance to children(1, 4)
Prince Edward Island
Split equally
1/3 to spouse; 2/3 to children(1)
Quebec
1/3 to spouse; 2/3 to child
(1d)
Saskatchewan
Yukon
(1f)
(1b)
(1)
1/3 to spouse; 2/3 to children(1)
(1)
First $100,000 to spouse; balance split equally
First $75,000 to spouse, balance split equally
(1)
(1)
Note: In some cases, provincial Family Law Acts can override these distribution formulas.
(1)
Issue of a deceased child (i.e., grandchildren, great-grandchildren) take that child’s share.
(1a)
In addition to “spouse”, the Alberta Intestate Succession Act refers to and accords equal
rights to an “adult interdependent partner”.
(1b)
“Spouse” in British Columbia and Saskatchewan includes common-law same-sex partners.
(1c)
Domestic partners (common-law partners of any sex registered as such in Nova Scotia)
will have the same rights and obligations as spouses under the Intestate Succession Act.
(1d)
A civil union spouse has the same rights to inherit as a spouse. A civil union is a new legal
institution in Quebec which entitles couples, whether of the same or opposite sex, to
similar legal rights and obligations as married spouses.
(1e)
Includes common-law partners (does not include same-sex common-law partners).
(1f)
If an intestate dies leaving a common-law spouse, under the Estate Administration Act, the
First $100,000 to spouse; 1/3 balance to spouse, 2/3 balance to children(1)
First $75,000 to spouse; 1/3 balance to spouse, 2/3 balance to children(1)
court may order that whatever portion of the intestate’s property that it deems appropriate
be retained and allotted to the common-law spouse for support and maintenance.
(1g)
The Intestate Succession Act of Manitoba, provides common-law opposite-sex or same
sex partners with equal rights to those of a married spouse upon intestacy.
(1h)
In effect on March 31st, 2014.
(2)
Spouse may elect to receive house and contents in lieu of $50,000.
(3)
Plus household furniture and life interest in family home.
(4)
Subject to possible equalization claim under Family Law Act.
(5)
Plus life interest in the home plus a possible equalization payment under the Marital
Property Act.
(6)
Plus household furniture.
Source: CCH Canadian Limited
Commonly Used CRA Guides
P105
Students and Income Tax
P113
Gifts and Income Tax
P151Canadian Residents Going
Down South
RC4092Registered Education Savings
Plans (RESPs)
RC4110 Employee or Self-employed?
RC4112 Lifelong Learning Plan (LLP)
RC4135 Home Buyers Plan (HBP)
RC4169Tax Treatment of Mutual Funds
for Individuals
RC4177 Death of an RRSP Annuitant
RC4178 Death of a RRIF Annuitant
Mackenzie Tax Brochures
RC4188 What You Should Know About Audits
T4002 Business and Professional Income
T4011
Preparing Returns for Deceased Persons
T4036 Rental Income
T4037
Capital Gains
T4040RRSPs and Other Registered
Plans for Retirement
T4055 Newcomers to Canada
T4056 Emigrants and Income Tax
T4058 Non-Residents and Income Tax
•Education Planning
•Income Splitting
•Guide to Tax-Efficient Investing: Corporate
Class Funds – Series T
•Mackenzie Charitable Giving Fund
•Making a Challenge Less Challenging
(Disability Benefits)
•Segregated Funds
•Strategies for Trusts in Tax and Estate Planning
•Tax-Free Savings Accounts
•Registered Disability Savings Plan
•Tax & Estate Planning for Business Owners kit
13311
For more information, please visit mackenzieinvestments.com/taxestate
Telephone: 416-967-2000 or 1-888-653-7070 Fax: 416-922-5660 or 1-866-766-6623
180 Queen Street West, Toronto, ON M5V 3K1
mackenzieinvestments.com/taxestate
TE1014 1/14
This should not be construed as legal or tax advice, as each client’s situation is different. The rates provided are the rates as at the
date of publication of this document and are subject to change at any time. Please consult your own legal and tax advisor.
2014 TAX FACTS
Mackenzie Tax & Estate Planning
Tax Brackets
The rates below are the combined federal and provincial marginal rates, including all surtaxes. It is assumed that the only credits claimed are the basic
personal amount and the low income tax reduction (where applicable). These rates are correct as at January 1, 2014 and do not reflect changes resulting
from federal or provincial announcements after that date.
British Columbia 2014
Taxable
Income
Interest and
Regular Income
$ – to 11,138
11,138 to 18,200
18,200 to 30,981
30,981 to 37,606
37,606 to 43,953
43,953 to 75,213
75,213 to 86,354
86,354 to 87,907
87,907 to 104,858
104,858 to 136,270
136,270 to 150,000
150,000 and over
–
15.00
23.26
20.06
22.70
29.70
32.50
34.29
38.29
40.70
43.70
45.80
Ontario 2014
Marginal Tax Rates (%)
Capital
Non-eligible
Eligible Canadian
Gains
Canadian Dividends
Dividends
–
7.50
11.63
10.03
11.35
14.85
16.25
17.15
19.15
20.35
21.85
22.90
–
4.70
11.39
7.61
10.73
18.99
22.29
24.40
29.12
31.97
35.51
37.98
–
-0.03
-2.43
-6.85
-3.20
6.46
10.32
12.79
18.31
21.64
25.78
28.67
Interest and
Regular Income
$ – to 11,138
11,138 to 17,787
17,787 to 43,953
43,953 to 87,907
87,907 to 136,270
136,270 and over
–
15.00
25.00
32.00
36.00
39.00
Marginal Tax Rates (%)
Capital
Non-eligible
Eligible Canadian
Gains
Canadian Dividends
Dividends
–
7.50
12.50
16.00
18.00
19.50
–
4.70
12.84
21.10
25.82
29.36
–
-0.03
-0.03
9.63
15.15
19.29
Saskatchewan 2014
Taxable
Income
$ – to 11,138
11,138 to 15,378
15,378 to 43,292
43,292 to 43,953
43,953 to 87,907
87,907 to 123,693
123,693 to 136,270
136,270 and over
Interest and
Regular Income
–
15.00
26.00
28.00
35.00
39.00
41.00
44.00
Marginal Tax Rates (%)
Capital
Non-eligible
Eligible Canadian
Gains
Canadian Dividends
Dividends
–
7.50
13.00
14.00
17.50
19.50
20.50
22.00
–
4.70
14.08
16.44
24.70
29.42
31.78
35.32
–
-0.03
-0.03
2.73
12.39
17.91
20.67
24.81
Manitoba 2014
Taxable
Income
$ – to 11,138
11,138 to 15,411
15,411 to 22,944
22,944 to 31,000
31,000 to 43,953
43,953 to 67,000
67,000 to 87,907
87,907 to 136,270
136,270 and over
Interest and
Regular Income
$ – to 11,138
11,138 to 14,085
14,085 to 18,500
18,500 to 40,120
40,120 to 43,953
43,953 to 70,647
70,647 to 80,242
80,242 to 83,235
83,235 to 87,907
87,907 to 136,270
136,270 to 514,090
514,090 and over
–
15.00
25.10
20.05
24.15
31.15
32.98
35.39
39.41
43.41
46.41
49.53
Marginal Tax Rates (%)
Capital
Non-eligible
Eligible Canadian
Gains
Canadian Dividends
Dividends
–
7.50
12.55
10.03
12.08
15.58
16.49
17.70
19.71
21.71
23.21
24.77
–
4.70
6.00
5.35
10.19
18.45
20.61
23.45
28.20
32.92
36.46
40.14
–
-0.03
-13.69
-6.86
-1.20
8.46
10.99
14.31
19.85
25.37
29.51
33.82
Quebec 2014
Alberta 2014
Taxable
Income
Taxable
Income
Interest and
Regular Income
–
15.00
34.80
25.80
27.75
34.75
39.40
43.40
46.40
Marginal Tax Rates (%)
Capital
Non-eligible
Eligible Canadian
Gains
Canadian Dividends
Dividends
–
7.50
17.40
12.90
13.88
17.38
19.70
21.70
23.20
–
4.70
27.08
16.46
18.77
27.03
32.51
37.23
40.77
–
-0.03
16.25
3.83
6.53
16.19
22.60
28.12
32.26
Taxable
Income
Interest and
Regular Income
$ – to 11,138
11,138 to 14,131
14,131 to 41,495
41,495 to 43,953
43,953 to 82,985
82,985 to 87,907
87,907 to 100,970
100,970 to 136,270
136,270 and over
–
12.52
28.52
32.52
38.37
42.37
45.71
47.46
49.97
Marginal Tax Rates (%)
Capital
Non-eligible
Eligible Canadian
Gains
Canadian Dividends
Dividends
–
6.26
14.26
16.26
19.19
21.19
22.86
23.73
24.99
–
3.92
14.48
19.20
26.11
30.83
34.77
36.84
39.79
–
-0.03
5.63
11.15
19.23
24.75
29.36
31.78
35.23
Nova Scotia 2014
Taxable
Income
$ – to 11,138
11,138 to 11,893
11,893 to 15,000
15,000 to 21,000
21,000 to 29,590
29,590 to 43,953
43,953 to 59,180
59,180 to 87,907
87,907 to 93,000
93,000 to 136,270
136,270 to 150,000
150,000 and over
Interest and
Regular Income
–
15.00
23.79
28.79
23.79
29.95
36.95
38.67
42.67
43.50
46.50
50.00
Marginal Tax Rates (%)
Capital
Non-eligible
Eligible Canadian
Gains
Canadian Dividends
Dividends
–
7.50
11.90
14.40
11.90
14.98
18.48
19.34
21.34
21.75
23.25
25.00
–
4.70
8.14
14.04
8.14
15.41
23.67
25.70
30.42
31.40
34.94
39.07
–
-0.03
-0.11
6.79
-0.11
8.39
18.05
20.42
25.94
27.09
31.23
36.06
2014 TAX FACTS
Dividend Taxation
Dividends received by individuals from Canadian corporations are
taxed based on a “gross-up” value and a corresponding tax credit. The
gross-up and tax credit varies depending on the type of dividend; i.e.,
whether “eligible” (dividends paid after 2005 from public companies and
private companies where the underlying income is subject to the general
corporate tax rate) or “non-eligible” (a dividend from a private Canadian
corporation where the related underlying income is investment income
or income subject to the small business rate).
Province
Eligible Dividends
Non-eligible Dividends
Alberta
$49,280
$21,840
Newfoundland and Labrador
$49,280
$20,730
Nova Scotia
$30,500
$21,655
The following table summarizes the amount of eligible and non-eligible
dividends that may be received without incurring tax in 2014, assuming
no other income or deductions other than the basic personal exemption
and dividend tax credit. Note however that AMT may be triggered in
some cases.
Ontario*
$31,380
$35,545
Prince Edward Island
$44,670
$12,825
Quebec**
$35,075
$21,405
Saskatchewan
$49,280
$18,030
British Columbia
$49,280
$22,290
Manitoba
$24,270
$13,630
New Brunswick
$49,280
$23,015
*Does not include Ontario Health Premium
**Does not include Quebec Health Services Fund
Other Tax Facts
2014 CPP Premiums:
Employee (4.95%): $2,425.50
Self-employed (9.90%): $4,851.00
2014 Quebec QPP Premiums:
Employee (5.175%): $2,535.75
Self-employed (10.35%): $5,071.50
2014 EI Premiums:
Employee (1.88%): $913.68
Employer (2.63%): $1,279.15
2014 Quebec EI Premiums:
Employee (1.53%): $743.58
Employer (2.14%): $1,041.41
Maximum pensionable earnings: $52,500
Maximum CPP retirement benefit: $1,038.33
13340
For more information, please visit mackenzieinvestments.com/taxestate
Telephone: 416-967-2000 or 1-888-653-7070 TTY: 416-922-4186 or 1-855-325-7030 Fax: 416-922-5660 or 1-866-766-6623
180 Queen Street West, Toronto, ON M5V 3K1
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TE1012 1/14
Old Age Security:
Maximum OAS benefit: $551.54
Clawback income threshold: $71,592 – $115,716
INCOME IN A CORPORATION 2014
Mackenzie Tax & Estate Planning
Earning investment income in a corporation
Earning investment income through a corporation involves two layers of income tax. First, the corporation is taxed on the income at corporate tax rates.
A second layer of personal income tax is triggered when the after-tax profits are paid out to the shareholder by way of a dividend.
The following tables demonstrate for various types of investment income and across the provinces whether:
1. There is a tax deferral (prepayment) to earning investment income through a corporation, as measured by the difference between the corporate and
personal tax rates on the investment income, and;
2.Upon distribution of corporate after-tax profits, whether there is a net savings (cost) associated with earning investment income through a corporation
compared to earning investment income personally.
Integration 2014
(current as of January 2014)
British
Columbia
INTEREST / FOREIGN INCOME
Top Personal Tax Rate
45.8%
Alberta
Saskatchewan
Manitoba
Ontario1
Quebec
New
Brunswick
Nova Scotia
PEI
Newfoundland
39.0%
44.0%
46.4%
46.4%
50.0%
46.8%
50.0%
47.4%
42.3%
Corporate Tax Rate
Corporate / Personal
Tax combined
Deferral / (Prepayment)
45.7%
44.7%
46.7%
46.7%
46.2%
46.6%
46.7%
50.7%
50.7%
48.7%
49.8%
42.1%
48.3%
52.6%
48.9%
51.8%
48.8%
53.7%
53.4%
46.2%
0.1%
(5.7%)
(2.7%)
(0.3%)
0.2%
3.4%
0.2%
(0.7%)
(3.3%)
(6.4%)
Tax Savings / (Cost)
(4.0%)
(3.1%)
(4.3%)
(6.2%)
(2.4%)
(1.8%)
(2.0%)
(3.7%)
(6.1%)
(3.9%)
CAPITAL GAINS
Top Personal Tax Rate
22.9%
19.5%
22.0%
23.2%
23.2%
25.0%
23.4%
25.0%
23.7%
21.2%
Corporate Tax Rate
Corporate / Personal
Tax combined
Deferral / (Prepayment)
22.8%
22.3%
23.3%
23.3%
23.1%
23.3%
23.3%
25.3%
25.3%
24.3%
24.9%
21.0%
24.1%
26.3%
24.4%
25.9%
24.4%
26.8%
26.7%
23.1%
0.1%
(2.8%)
(1.3%)
(0.1%)
0.1%
1.7%
0.1%
(0.3%)
(1.7%)
(3.2%)
Tax Savings / (Cost)
(2.0%)
(1.5%)
(2.1%)
(3.1%)
(1.2%)
(0.9%)
(1.0%)
(1.8%)
(3.0%)
(1.9%)
CANADIAN ELIGIBLE DIVIDENDS
Top Personal Tax Rate
28.7%
Corporate Tax Rate
Corporate / Personal
Tax combined
Deferral / (Prepayment)
Tax Savings / (Cost)
19.3%
24.8%
32.3%
29.5%
35.2%
27.4%
36.1%
28.7%
22.5%
33.3%
33.3%
33.3%
33.3%
33.3%
33.3%
33.3%
33.3%
33.3%
33.3%
28.7%
19.3%
24.8%
32.3%
29.5%
35.2%
27.4%
36.1%
28.7%
22.5%
(4.7%)
(14.0%)
(8.5%)
(1.1%)
(3.8%)
1.9%
(6.0%)
2.7%
(4.6%)
(10.9%)
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Conclusion:
For every province outlined above,
• There is no material tax deferral available by investing through a corporation2
• There is a tax cost associated with investing through a corporation
NOTES:
• Tax rates in effect as of January 1, 2014 and do not reflect changes resulting from federal or provincial announcements after this date.
• Corporate tax rates apply to Canadian-controlled private corporations (CCPCs). The net corporate tax liability is lowered once the after-tax profits are distributed to the shareholder and the
corporation is refunded some or all of its corporate tax, through a refundable tax mechanism designed to provide integration and discourage the use of corporation as a tax deferral vehicle.
• Part I tax is applicable to interest, foreign income and taxable capital gains and is subject to a 26 2/3rds refundable tax. The combined corporate and personal taxes take into account the
refundable taxes applicable to the investment income.
• Canadian dividends are subject to Part IV tax. Part IV tax is fully refundable once the after-tax profits are distributed to the shareholder. As a result of this perfect integration, there is no difference
between earning Canadian dividends personally, or earning Canadian dividends through a corporation and distributing out the after-tax profits to the shareholder.
• Personal tax rates are assumed to be top marginal tax rates. The tax deferral and savings conclusions will differ if individual is not in the top marginal tax bracket.
Top personal tax rate ignores 2% tax increase on income in excess of $514,090.
An exception applies to Nova Scotia and Quebec for eligible dividends, and Quebec for interest/foreign income and capital gains.
1
2
INCOME IN A CORPORATION 2014
Earning active business income (ABI) in a corporation
Earning business or professional income through a corporation involves two layers of taxation. First, the income is taxed inside the corporation. Then,
the after-tax profits are taxed again at the personal level when they are distributed to the shareholder.
The following tables demonstrate for active business income (ABI) and across the provinces whether:
1. There is a tax deferral (prepayment) to earning business or professional income through a corporation, as measured by the difference between
the corporate and personal tax rates on the business income, and;
2.Upon distribution of corporate after-tax profits, whether there is a net savings (cost) associated with earning business income through a corporation
compared to earning business or professional income personally.
Integration 2014
(current as of January 2014)
British
Columbia
Alberta
Saskatchewan
Manitoba
Ontario1
Quebec
New
Brunswick
Nova Scotia
PEI
Newfoundland
INCOME EARNED BY INDIVIDUAL
Business Income ($)
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
Top Marginal Tax Rate
45.8%
39.0%
44.0%
46.4%
46.4%
50.0%
46.8%
50.0%
47.4%
42.3%
458
390
440
464
464
500
468
500
474
423
542
610
560
536
536
500
532
500
526
577
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
14.0%
13.0%
11.0%
15.5%
19.0%
15.5%
14.0%
15.5%
15.0%
140
130
110
155
190
155
140
155
150
860
870
890
845
810
845
860
845
850
29.4%
35.3%
40.8%
36.5%
39.8%
36.0%
39.1%
38.7%
31.0%
252
307
363
308
322
304
336
327
264
608
563
527
537
488
541
524
518
586
32.3%
25.0%
31.0%
35.4%
30.9%
31.0%
31.3%
36.0%
31.9%
27.3%
(0.6%)
(0.2%)
0.3%
(0.9%)
0.1%
(1.3%)
0.9%
2.4%
(0.9%)
0.9%
Personal Income Taxes ($)
Net Income to
Individual ($)
INCOME EARNED BY CORPORATION
Active Business Income ($)
1,000
Small Business Corporate
13.5%
Tax Rate
Corporate Tax ($)
135
After-tax profit available
865
to shareholder ($)
Top Non-eligible Dividend
38.0%
Marginal Tax Rate
Personal Tax on
329
Non-eligible Dividend ($)
Net Income to
536
Shareholder ($)
SUMMARY
Tax Deferral /
(Prepayment)
Tax Savings / (Cost)
Conclusion:
For every province outlined above,
• There is a significant tax deferral by earning ABI through a corporation
• There is no material tax savings by earning ABI through a corporation (except in Nova Scotia)
NOTES:
• Tax rates in effect as of January 1, 2014 and do not reflect changes resulting from federal or provincial announcements after this date.
• Corporate tax rate reflects the small business income up to $500,000 federally and for every province, except Nova Scotia and Manitoba where the small business limit is at $350,000 and
$425,000 respectively.
• After-tax profits are distributed by way of a non-eligible dividend and the shareholder is assumed to be in the top marginal tax bracket for their respective province.
Top personal tax rate ignores 2% tax increase on income in excess of $514,090.
13339
For more information, please visit mackenzieinvestments.com/taxestate
Telephone: 416-967-2000 or 1-888-653-7070 TTY: 416-922-4186 or 1-855-325-7030 Fax: 416-922-5660 or 1-866-766-6623
180 Queen Street West, Toronto, ON M5V 3K1
mackenzieinvestments.com/taxestate
TE1040 1/14
1