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Glossary term
Marginal Tax Rate
The tax rate on your next earned dollar (combined federal + provincial). Canada uses progressive brackets: the first ~$57K is 15% federally, top brackets reach 33% + provincial. Your average rate is always lower than your marginal rate. Knowing it is key to valuing an RRSP deduction or a bonus.
Related terms
PRE
Principal Residence Exemption — shelters the capital gain on selling a home that was your principal residence…
CDA
Capital Dividend Account — a notional CCPC account tracking the tax-free half of capital gains (the 50% not i…
Eligible vs Non-Eligible Dividends
Two categories of Canadian dividends with different gross-up and dividend tax credit. Eligible (from public-c…
Tax Integration
A core principle of Canada's tax system: income earned through a corporation and paid to the owner as a divid…
GIC
Guaranteed Investment Certificate — a deposit product with guaranteed return of principal + fixed interest ov…
Foreign Withholding Tax
Tax another country withholds from dividends before paying you. The US withholds 15% on dividends from US sto…
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