Reducing Taxes

Taxation • Different Income, Different Tax • Interest Income • Dividend Income • Capital Gains Taxation Different Types of Income Are Taxed Differently Interest Income: Interest you earn from bonds or GICs is considered ordinary income and is taxable at your marginal rate as it accrues, even if you don’t receive this income until later. Dividend Income: Dividends are payments or distributions from corporations to their shareholders. You must “gross up” the amount of dividends that you receive by a factor greater than 100%, but you may also claim a dividend tax credit against a portion of the resulting tax bill. Capital Gains: The increase in value of your investments is considered a capital gain, and is taxable when the investment is sold. 50% of capital gains are subject to tax as ordinary income. (Source: Mackenzie Investments. Guide to Tax-Efficient Investing)