Calculate Grossed Up Dividend Ontario Calculator

When you receive dividends from Canadian corporations, they are "grossed up" to account for the taxes that will be paid on them. This calculator helps you determine the grossed up amount of dividends you'll receive in Ontario, considering the applicable tax rates.

What is a Grossed Up Dividend?

A grossed up dividend is the amount of dividends you receive from a corporation, adjusted to reflect the taxes that will be paid on those dividends. In Canada, dividends are taxed at both the corporate level and the personal level. The grossed up amount helps investors understand the after-tax value of their dividend income.

Grossed up dividends are reported on your T1 tax return and are subject to both corporate and personal income tax.

The grossed up amount is calculated by dividing the dividend amount by (1 - the combined corporate and personal tax rates). This gives you an estimate of the gross amount of dividends that would result in the same net amount after taxes.

How to Calculate Grossed Up Dividend

The formula to calculate the grossed up dividend is:

Grossed Up Dividend = Dividend Amount / (1 - (Corporate Tax Rate + Personal Tax Rate))

Where:

Dividend Amount - The net amount of dividends received
Corporate Tax Rate - The tax rate applied by the corporation (typically 25% in Canada)
Personal Tax Rate - The tax rate applied to the dividend at the personal level

For Ontario residents, the personal tax rate on dividends is typically 15.02% (as of 2023).

Ontario Tax Rates for Dividends

In Ontario, the tax treatment of dividends is as follows:

Tax Type	Rate (2023)
Corporate Tax Rate	25%
Personal Tax Rate (Ontario)	15.02%
Combined Rate	39.02%

The combined tax rate is used in the grossed up dividend calculation to determine the effective tax burden on your dividend income.

Example Calculation

Let's say you receive $1,000 in dividends from a Canadian corporation. Using the Ontario tax rates:

Grossed Up Dividend = $1,000 / (1 - (0.25 + 0.1502))

= $1,000 / (1 - 0.3902)

= $1,000 / 0.6098

= $1,640.25

This means the corporation would need to declare $1,640.25 in dividends to pay you $1,000 after taxes.

Frequently Asked Questions

What is the difference between grossed up and net dividends?

Grossed up dividends represent the amount before taxes, while net dividends are the amount after taxes. The grossed up amount helps investors understand the pre-tax value of their dividend income.

Are grossed up dividends reported on my tax return?

Yes, grossed up dividends are reported on your T1 tax return and are subject to both corporate and personal income tax.

How does the grossed up dividend calculation change with different tax rates?

The grossed up amount increases as the combined tax rate increases. Higher tax rates will result in a larger grossed up dividend amount for the same net dividend.

Can I use this calculator for dividends from non-Canadian corporations?

This calculator is specifically designed for Canadian corporations and Ontario residents. For dividends from non-Canadian corporations, you may need to use a different calculation method.