Tax Tables

1. Marginal tax rate for capital gains is shown as a % of total capital gains (not taxable capital gains).

2. Gross-up rate for eligible dividends is 38%, and for non-eligible dividends is 15%.

3. Negative amounts can only be used to offset other income taxes payable (it is assumed the taxpayer has other income).

4. Salary, RRSP/RRIF withdrawals and other income are taxed at the regular marginal rates, e.g. see other income.

5. One can invest currently up to $7,000.00 per year or the cumulative amount you haven't contributed to date in a tax-free savings account (TFSA).

   As of 2026, the potential cumulative contribution room could be up to $109,000 for someone eligible since 2009. Individual contribution room varies.

   Any income earned, capital gains or contributions within the plan can be withdrawn tax-free. Withdrawals can be re-contributed in a future year, as long as you have available contribution room.

6. Ineligible dividends are defined as dividends paid by a Canadian company from income which is subject to the small business deduction.

   Eligible dividends are dividends paid by a corporation taxed at high rates, other than investment income generally paid by a public company or a dividend paid to an investment company originating from a public company and then paid through to an individual taxpayer.

7. Canadian dividends and capital gains have a significant tax advantage. For taxpayers with lower income, dividends are particularly attractive.

8. Capital Gains

   The capital gains inclusion rate remains at 50%. While a 2/3 rate was proposed in 2024, the government officially cancelled the increase in 2025.

   The Lifetime Capital Gains Exemption (LCGE) increased to $1.25 million, effective June 25, 2024. This limit is now indexed to inflation annually.

   Capital gains are only taxed when realized. Accrued capital gains are tax-deferred until disposal.

   The principal residence exemption remains tax-free on the sale.

9. Home office expenses allowed. You may claim expenses for using part of your home as a place of business, e.g. ‘work space’ in a self-contained domestic establishment, providing:

   a. The workspace is your principal place of business, or the workspace is used exclusively for the purpose of earning income from your business

   b. Provided you qualify for a deduction at all under those tests, you set aside ‘space’ exclusively for your business of earning income.

   Deductible expenses

   Workspace portion of your rent, insurance, property taxes, mortgage interest, heat and light.

   Telephone related to the business, supplies, computer, furniture and equipment, and capital cost allowance (CCA) on those items.

   Note: While you can claim CCA on business equipment, claiming CCA on the building/structure of your home may result in that portion no longer qualifying for the Principal Residence Exemption when the property is sold. For more details, see CRA Business-use-of-Home Expenses.

                       The Combined Corporate Tax Rates (Federal & British Columbia)

                                                                                   2026                 2025
                                    General                                27.0%            27.0%
                                    Small Business                     11.0%            11.0%
                                    Investments                         50.7%            50.7%

Image Credit: GRANVILLE ISLAND FERRY, Vancouver. The Artful Tour | ARTIST DEL MILLER