Section 7 – Investments

Investment Income Comparison

A number of factors have to be considered when acquiring an investment, in particular the inherent risk as well as the individual’s risk tolerance. The after-tax rate of return is still often a determining factor in this regard. The following table presents a comparison of pre-tax returns on various investment categories in 2018. These calculations are based on the maximum marginal tax rate. Thus, in Quebec, an eligible dividend of 3.11% before taxes is equal to a 4% interest return before taxes, for a net tax return of about 1.9% in both cases.

2018 Pre-tax interest rate of
(%)
Provides the same after-tax return as
Capital gain Eligible dividend Other dividend
at a pre-tax rate of: (%)
Quebec3 4
5
6
7
2.55
3.18
3.82
4.46
3.11
3.88
4.66
5.44
3.39
4.23
5.08
5.92
Ontario 4
5
6
7
2.54
3.17
3.81
4.44
3.06
3.83
4.60
5.36
3.50
4.37
5.24
6.12
New Brunswick 4
5
6
7
2.55
3.18
3.82
4.46
2.81
3.51
4.21
4.92
3.52
4.40
5.27
6.15

 


3 For dividend income, this table takes into account tax rates applicable since March 28, 2018.

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