Want to make your neighbour or brother-in-law's head spin?
Right around this time of year is an absolutely perfect time to mention to someone that eligible dividends from Canadian Corporations attract a tax rate of only 6.9% if you live in Ontario. If you happen to live in BC or Alberta that rate gets even better at 4.4%. This is assuming that one earns $55,000 in total taxable income.
This compares with employment income which draws an average tax rate of about 20% in these provinces and a marginal (last dollar) rate of about 30%.
The only problem is that if you would like to earn dividends totalling a net amount of $44,000, as you would in employment income, you would need a portfolio valued at about $945,000. That being said, dividend income can provide a very good supplement to employment income as you go through your career and can be relied on more and more as you grow your portfolio.