What is your annual income?

[John_Jacob]

Well you are referring to 80 to 100K which is precisely his example of 100K.
In any event I can't see how dividend tax credits can offset that much income.
I have plenty of Dividend paying investments and my dividend tax credit is nowhere close to offsetting much income.
I'll certainly check out taxtips.ca

At the most basic level (not really correct but for illustration)...

In Ontario the dividend tax credit is 25%. That is, 15% federal and 10% so total of 25%. So, say you make $60,000 dividends (about $1.5M investments). That's grossed up $60,000 x 1.38 to $82,800. You get a dividend tax credit of $82800 x 25% of $20,700.
At $82,800, your combined tax rate $49,231x 20.05%+ $4128 x 24.15%+ $29441x 29.65% for a total of $19,596.98 in income taxes. At this amount the tax you pay with the DTC is a wash. Add in Basic Personal Amounts as well as a few other smattering of credits and you can see how you can add RRSP/RIF income and still pay <5% tax.

Using the detailed taxtips calculator

TaxTips.ca - 2023 and 2024 Canadian Tax Calculator

TaxTips.ca - 2023 and 2024 Canadian income tax and RRSP savings calculator - excellent tax planning tool - calculates taxes, shows RRSP savings, includes most deductions and tax credits.

www.taxtips.ca

With $60,000 (actual) of eligible dividend income, the tax rate would be 3.22% for 2023. Add in another $15,000 of RRSP/RIF income, for a total income of $75,000, and your tax rate would be 5.4%.

Another example is $15,000 of capital gains (for a total income of $75,000) and your tax rate would be 5.32%.

You can see how you can play - for future planning purposes - with the mix of taxable, non-taxable (TFSA) and tax-deferred (RRSP) investments to determine your best/optimum retirement income. Add in other tax credits, carry over capital losses, as well as, say, pension splitting when this happens & if applicable, and you can see how you get to that lower tax rate.

Investing is not always about about how you put it in but sometimes more importantly how you withdrawal (yes, that was a joke, this is TERB).

Dividend income from Blue Chips should grow about 7.5% +/- a year so it can work quite well for a number of years**.
**note that dividends are quite tax-costly once you get beyond $150K-ish in income and capital gains become MUCH MUCH better tax-wise. But hey, $150K of retirement income is a good thing to have and not many people have to worry about that particular problem.

Next up; how to hide cash flow from the spouse to spend on SPs using RESPs.

 

[superstar_88]

At the most basic level (not really correct but for illustration)...

In Ontario the dividend tax credit is 25%. That is, 15% federal and 10% so total of 25%. So, say you make $60,000 dividends (about $1.5M investments). That's grossed up $60,000 x 1.38 to $82,800. You get a dividend tax credit of $82800 x 25% of $20,700.
At $82,800, your combined tax rate $49,231x 20.05%+ $4128 x 24.15%+ $29441x 29.65% for a total of $19,596.98 in income taxes. At this amount the tax you pay with the DTC is a wash. Add in Basic Personal Amounts as well as a few other smattering of credits and you can see how you can add RRSP/RIF income and still pay <5% tax.

Using the detailed taxtips calculator

TaxTips.ca - 2023 and 2024 Canadian Tax Calculator

TaxTips.ca - 2023 and 2024 Canadian income tax and RRSP savings calculator - excellent tax planning tool - calculates taxes, shows RRSP savings, includes most deductions and tax credits.

www.taxtips.ca

With $60,000 (actual) of eligible dividend income, the tax rate would be 3.22% for 2023. Add in another $15,000 of RRSP/RIF income, for a total income of $75,000, and your tax rate would be 5.4%.

Another example is $15,000 of capital gains (for a total income of $75,000) and your tax rate would be 5.32%.

You can see how you can play - for future planning purposes - with the mix of taxable, non-taxable (TFSA) and tax-deferred (RRSP) investments to determine your best/optimum retirement income. Add in other tax credits, carry over capital losses, as well as, say, pension splitting when this happens & if applicable, and you can see how you get to that lower tax rate.

Investing is not always about about how you put it in but sometimes more importantly how you withdrawal (yes, that was a joke, this is TERB).

Dividend income from Blue Chips should grow about 7.5% +/- a year so it can work quite well for a number of years**.
**note that dividends are quite tax-costly once you get beyond $150K-ish in income and capital gains become MUCH MUCH better tax-wise. But hey, $150K of retirement income is a good thing to have and not many people have to worry about that particular problem.

Next up; how to hide cash flow from the spouse to spend on SPs using RESPs.

This is excellent.
A few things I wasn't aware of until now thanks to you.
I wasn't aware of the gross up. I am now.
I wasn't aware dividends are taxed at a different rate. I am now.

 

[Ponderling]

I still work 3 days a week for a salary of about $90K.

Yes, the joy of the non registered account DTC.

My wife is early retired. Most of her assets are in the non reg account.

We draw about 36K a year in dividends from there. We then intentionally trigger capital gains on enough to bring her taxable income to just under 70K when the marginal tax rates starts its next step. Last year she had to write a cheque for $4k for taxes owing for a paper income of 70K.

Her income is presently reinvested while I still work. The triggering of capital gains to raise the cost basis while her income is 'low' is being done while the taxable inclusion rate is still 50%. It could go up soon to pay for Justie's spendy ways.

Later when she starts on oas/cpp and RRIF income the chance to pay CG taxes at such a low rate will go away.

 

[superstar_88]

If you were to pull that money out from your rrsp or nonregistered investment account, you would pay about 25-30% in taxes. But since you are borrowing money, you pay zero taxes.

You will eventually take money out of your rrsp. Otherwise what's the point of having an rrsp? When that money comes out of rrsp it will be taxed as income.
The borrowed money will eventually need to be paid back. Where is that money coming from? Your rrsp?

Money earned in an rrsp either dividends or captial gains are not taxed but will be when it's pulled out and that's taxed as income.
Dividends and capital gains in none registered accounts have tax advantages such as dividend tax credits and 50% of captial gains taxable. So isn't it better to have assets in non registered accounts rather that registered accounts from a tax standpoint?

 

[Darts]

The men or women making $500,000 or more must be getting a lot of PM's.

 

[DanteHall]

Talking about income can be a bit personal, but I totally get the curiosity. When I wondered how to make quick money, I found some creative ways to boost my income without a traditional job. One thing I did was freelance writing gigs and graphic design projects on the side. It helped me cover unexpected expenses and save up for future goals. Remember, there are always opportunities out there if you're willing to explore!

 

[NotADcotor]

On a normal year after I sell out to pay up for a new car and my father's estate income taxes, about 38K on a meh year from dividends, no taxes other than the Ontario health levy
However if my dividends grow faster than inflation [as I expect] I will take out the difference so if inflation is 2% and dividends grow by 5%, I'll sell about 3% of my holdings for an extra 20ish in income, about 16 or 17 after tax. Own my own home, thinking about renting out the basement, but I live in a small berg and after taxes it won't yield much.

 

[TomFord1980]

Does a pension count? Only 110k a year after Turdeau takes his share

On a normal year after I sell out to pay up for a new car and my father's estate income taxes, about 38K on a meh year from dividends, no taxes other than the Ontario health levy
However if my dividends grow faster than inflation [as I expect] I will take out the difference so if inflation is 2% and dividends grow by 5%, I'll sell about 3% of my holdings for an extra 20ish in income, about 16 or 17 after tax. Own my own home, thinking about renting out the basement, but I live in a small berg and after taxes it won't yield much.

Inflation wont be at 2% for a long time lad.

 

[Ceiling Cat]

 

[NotADcotor]

Inflation wont be at 2% for a long time lad.

1: It was just an example
2: I disagree, IIRC " CPI inflation slowed to 2.8% in February, with easing in price pressures becoming more broad-based across goods and services." 2.8 is within the 1 to 3% range we used to have. Considering the round of inflation was due to a temporary monetary shock of having everyone off work for a while and shoveling cash out of helicopters with a natural end point, this is to be expected that prices would "stabilize at a new higher level to continue their 1 to 3 percent thing or whatever range they pick next.

 

[TomFord1980]

1: It was just an example
2: I disagree, IIRC " CPI inflation slowed to 2.8% in February, with easing in price pressures becoming more broad-based across goods and services." 2.8 is within the 1 to 3% range we used to have. Considering the round of inflation was due to a temporary monetary shock of having everyone off work for a while and shoveling cash out of helicopters with a natural end point, this is to be expected that prices would "stabilize at a new higher level to continue their 1 to 3 percent thing or whatever range they pick next.

Ive seen this movie before in the 70s 80s. The idiot carbon tax increased by 20+% this month alone. This will cause a price increase in everything. Inflation will rise again, leading to more rate hikes

 

[DesRicardo]

All of you that selected anything above $250,000 better watch out. Trudeau is about to tax the shit out of you.

 

[jeff2]

All of you that selected anything above $250,000 better watch out. Trudeau is about to tax the shit out of you.

I am wondering if you had a 300,000.00 gain. Would the extra tax(2 thirds) be just on the extra 50,000.00?

 

[chodge]

A couple of problems with this example.

First, the bank won't lend you money against an asset without proof than you can make the loan payments.
They also won't let you use your RRSP as collateral.

Even if they did, at the end of year one, you have spent the 100k but still owe the bank 100k minus whatever you paid back.
After 5 years, you owe as much as the stocks are worth, the bank won't lend you anymore money and you're broke.

sooner if you started in 2022 and lost 20 percent

 

[wiskey bravo]

Gross income 275,000K

 

[NotADcotor]

Ive seen this movie before in the 70s 80s. The idiot carbon tax increased by 20+% this month alone. This will cause a price increase in everything. Inflation will rise again, leading to more rate hikes

OK, don't let me interrupt your 2 minutes of hate with math, facts or reality.

 

[Robert Mugabe]

Gross income 275,000K

that reads as two hundred and seventy thousand thousand. Not bad....either that, or the K is redundant.

 

[wiskey bravo]

that reads as two hundred and seventy thousand thousand. Not bad....either that, or the K is redundant.

Good point. I guess my brain goes on auto pilot and adds the unnecessary K without thinking about it. The profession I embarked in started at 18,000 per year, therefore, it was not all roses. Every year the salary climbed. 22 years has passed and here I am. That's not including four years of school.

My superior to me who I will replace in two years makes 453,000. Something to look forward too. I'm 47 years old. My biggest thanks goes towards my mother who pushed school on me. Only women who believed in me. Wish she was still around so I can share the salary with her.

 

[Robert Mugabe]

Good point. I guess my brain goes on auto pilot and adds the unnecessary K without thinking about it. The profession I embarked in started at 18,000 per year, therefore, it was not all roses. Every year the salary climbed. 22 years has passed and here I am. That's not including four years of school.

My superior to me who I will replace in two years makes 453,000. Something to look forward too. I'm 47 years old. My biggest thanks goes towards my mother who pushed school on me. Only women who believed in me. Wish she was still around so I can share the salary with her.

What kind of school?

 

[wiskey bravo]

What kind of school?

Aviation. Pilot. Big shortage of Pilots which is driving salaries up. It's not a quick fix too since experience is required to fly heavy metal. I don't work for an airline. Corporate Aviation.