2019 Newfoundland Marginal Tax Rates

How much you pay in income taxes in Newfoundland will depend on how much you make and how you make your money.  The most taxed earnings will be derived from labour, followed by capital gains or dividends depending on your marginal tax bracket.
    Newfoundland is the most taxed province when it comes to receiving Canadian eligible dividends, but you will still be able to receive over $17,000 in dividends tax free if you have no other taxable income.


Credit Card Nerd Math

Below we have two charts with the marginal tax rates, the amount of after tax earnings for every dollar earned ($1 - $1 x Tax Rate), the amount needed to take home a dollar ($1 ÷ After Tax Earnings), the tax rate on Canadian eligible dividends and the capital gains tax rate.



2019 Provincial Marginal Tax Rates in Newfoundland

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate

Capital Gains Tax Rate

first $37,591

8.7%

$0.913

$1.095

4.55%

4.35%

over $37,591 up to $75,181

14.5%

$0.855

$1.170

12.56%

7.25%

over $75,181 up to $134,224

15.8%

$0.842

$1.119

14.35%

7.9%

over $134,224 up to $187,913

17.3%

$0.827

$1.209

16.42%

8.65%

over $187,913

18.3%

$0.817

$1.224

17.8%

9.15%


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Basic Personal Amount: Your first $9,414 in earnings are exempt from provincial income taxes in Newfoundland for 2019.
Capital Gains: Taxable income derived from capital gains will be reduced by half, making an effective marginal tax rate on capital gains that is 50% of your current marginal tax rate.  For example, if you have $10,000 in capital gains, you would have $5,000 in taxable income from your capital gains.



2019 Combined Federal and Provincial Marginal Tax Rates in Newfoundland

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate

Capital Gains Tax Rate

first $37,591

23.7%

$0.763

$1.311

4.53%

11.85%

over $37,591 up to $47,630

29.5%

$0.705

$1.418

12.53%

14.75%

over $47,630 up to $75,181

35%

$0.65

$1.538

20.12%

17.5%

over $75,181 up to $95,259

36.3%

$0.637

$1.570

21.91%

18.15%

over $95,259 up to $134,224

41.8%

$0.582

$1.718

29.5%

20.9%

over $134,224 up to $147,667

43.3%

$0.567

$1.764

31.57%

21.65%

over $147,667 up to $187,913

46.3%

$0.537

$1.862

35.71%

23.15%

over $187,913 up to $210,371

47.3%

$0.527

$1.898

37.09%

23.65%

over $210,371

51.3%

$0.487

$2.053

42.61%

25.65%


Federal Personal Amount: Your first $12,069 in earnings are exempt from Federal taxes in 2019.


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Tax on Eligible Dividends in Newfoundland

Eligible Canadian dividends that you have received will be grossed up by 38%.  You will also be given a 5.4% provincial dividend credit as well as a 15.0198% federal dividend tax credit on your grossed up dividends.
    Someone that has an annual salary that is less than $35,851 will have a net marginal tax rate on their dividends of 4.55%.
    The provincial tax rate on dividends received is (($1 x 1.38 x 8.7%) - ($1.38 x 5.4%))/$1 = 4.554% at the first bracket..

How the math works;

  • first off your $1 in dividends will increase your taxable income by ($1 x 1.38) = $1.38
  • You will get a dividend tax credit of ($1.38 x 5.4%) = $0.07452
  • You will be taxed on your $1.38 at 8.7% and will have your taxes reduced by $0.07452
  • This works out to ($1.38 x 8.7% - $0.07452) = $0.04554 in net taxes on your $1 of dividends
  • The effective tax rate would be 4.55% on dividends received

For the other tax brackets, we will assume that you are getting paid $1 in dividends to keep the calculations simple.

  • At the second bracket the tax on dividends paid would be ($1.38 x 14.5% - $0.07452) ÷ $1 = 12.56%
  • At the third bracket the tax on dividends paid would be ($1.38 x 15.8% - $0.07452) ÷ $1 = 14.35%
  • At the fourth bracket the tax on dividends paid would be ($1.38 x 17.3% - $0.07452) ÷ $1 = 16.42%
  • At the top bracket the tax on dividends paid would be ($1.38 x 18.3% - $0.07452) ÷ $1 = 17.8%

Dividend Tax Neutral Number

Newfoundland is the worst province to earn dividend income, but that shouldn't stop you from collecting dividends.  You can earn over $17,000 in dividend income and pay no tax if it is your only source of income.
    First off, we will need to determine how much tax you would pay before the dividend tax credit.  The tax would be (1.38 gross up x $17,000 Dividends Received - $9,414 personal amount) x 8.7% = $1222.00 in provincial taxes.  The tax credit on $17,000 worth of dividends would be (1.38 x $17,000 x 5.4%) = $1266.84.


Provincial Tax Rates: Provincial Tax Rates 2019
Newfoundland and Labrador Personal Tax Credits 2019
Federal Tax Rates: Federal Tax Rates 2019
Federal Dividend Tax Credit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/425-eng.html