taxation of stock dividends - Marginal Tax Rates in BC. -

My_question_is: Applicable to both US and Canada
Subject:        taxation of stock dividends
[email protected]
Date:           Wednesday March 14, 2007
Time:           06:15 PM -0500


If a single person living in canada owns u.s. stock such as at&t should that person be better off receiving his dividends in the states. THis person resides in canada for more than 183 days a year which means she will be taxed as a canadian. I realise that under canadian taxation there is to be deducted from their percentage consideration of american taxes that are executed in that country (u.s.). There is also a factor of this person's lawyer trying to control her estate from canada. By putting her dividends in a american bank instead of a canadian is this a smart move in that he will not be able to get into her estate as easily. Her dividends are around $10,000 a month and she is taxed at 82% in canada. Is this right?
david ingram replies:

I assume that you are a US citizen living  in Canada most of the time and that it is a Canadian lawyer you are talking about.
I cannot comment on the situation with your lawyer. However as a non-resident of the USA and a resident of Canada, it does not matter where you have dividends deposited. The dividends and all of your world income are subject to Canadian tax at the marginal tax rate for the province you are living in.

In BC for instance there are 6 marginal tax rates

up to    $33,755,         you pay                21.3%
from     $33,755 to     36,378 you pay     24.509%
from     $36,378 to     72,756 you pay     31.185%
from     $72,756 to     77,511 you pay     37.7%
from     $77,511to      94,121 you pay     39.73%
from     $94,121 to   118,285 you pay      40.792%
over    $118,285                    you pay      43.7%


Going up a tax bracket, does NOT increase the tax you have already paid.

You only pay the higher tax bracket on the next $1.00, not the dollars  below.

Every province will be different but:

There is NO SUCH THING as an 82% tax rate in Canada

And, if you had ordinary Canadian Dividends, the tax rate would be half of the amount I have quoted above.  In fact, if all you had was $25,000 worth of dividends in Canada, there would be NO tax at all and if you received $100,000  worth of Canadian dividends, the grossed up amount would only have $15,526.07 of tax payable.

And if you had $100,000 of Eligible Canadian Dividends, the tax on $100,000 of eligible dividends in BC is only $9,197.36.
Now, if you are an American citizen living in Canada, the maximum tax you will pay to the US is 15% under articles X and XXIV(5)(c) of the US / Canada Tax Treaty. 

It is very important to take advantage of this because Canada's CRA  will only allow you a tax credit of 15% tax for dividends.

When the tax credit is claimed at the amounts you are suggesting, it is a dollar for dollar deduction from Canadian Tax.


If you are having a problem with your lawyer, you need to deal with and get advice from a lawyer in the province in which you are living. Make sure you find a specialist in the topic you are having a problem with.  But, be careful.  Advertising a service does NOT automatically mean that the person is really good at that particular topic.  Check around for references.

A very good method is to ask the lawyer you are having your difference of opinion for the names of two or three others you could get a second opinion from.

Another method of finding a lawyer is to phone the law society where you live. However, I do not recommend this because (in my opinion) the Law Society personnel  will NOT give a recommendation based upon the best but upon who is there.

Now, for the record I spent almost three hours answering this because it was about time I figured out the marginal tax rates for this year and I figured out my own rather than using someone else's . 

The good news is that Half my new roof went on today and the rest should be done tomorrow.

I am going to bed now at 12:30, the earliest in the last three weeks.

david ingram 
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
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Calls welcomed from 10 AM to 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office)
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.
Just a guideline not etched in stone. 
This from "ask an income trusts tax and immigration expert" from or or David Ingram deals on a daily basis with expatriate tax returns with multi jurisdictional cross and trans border expatriate problems  for the United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax  Immigration Wizard Antarctica Rwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention

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