Combined Federal and Ontario Marginal Tax Rates – 2007 (1)(2)

*Calculated on actual dividends, not grossed-up amount for tax purposes. These rates take into account proposed changes based on a new, two-tier dividend tax structure that Ontario plans to implement. Check with your certified general accountant to confirm which dividend rates are applicable to you.

# Eligible dividends include those received from a public Canadian corporation and certain private, resident corporations that must pay Canadian tax at the general corporate rate. Note that negative rates of return for certain lower taxable income amounts, which may represent tax credits or refunds, are approximate figures only because federal tax and provincial/territorial tax are calculated separately and cannot typically be offset against one another.

## Non-eligible dividends include those received from Canadian-controlled private corporations (CCPC) that are not subject to the general corporate tax rate.

(1) Tax rates before personal credits are applied, except for Ontario surtax, denoted as a double asterisk (**), which is net of the basic personal credit only. See the section on Federal and Ontario Provincial Non-Refundable Tax Credits, beginning on page 70, for tax credit information. It is assumed each bracket is composed of ordinary income. The rate indicated is the marginal rate for additional income of the type noted.

(2) The increased tax bracket limits for 2007, above, assume a federal CPI adjustment of 2.2 per cent and a provincial CPI adjustment of 2.1 per cent in 2007.

Seniors Clawback Provisions Create Additional Tax

The federal and provincial credits for age amount are reduced by 15% of net income over $27,749. The total credit is eliminated when net income reaches %52,958.

The Old Age Security pension is reduced by 15% of net income over $56,968, eliminating the pension at a net income of $92,600. This is the equivalent of adding 15% to each tax rate between $27,749 and $92,600.

Also note that dividend income is grossed up by 25% in determining net income. This type of income will make the clawback provisions start sooner.

Seniors are the highest taxed group in Ontario!