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Investment income isn’t taxed one way. Say you earn $60,000 in Ontario and then add $10,000 of investment income. Interest adds $2,965 to your tax bill, non-eligible dividends add $2,028, a capital gain adds $1,483 and eligible dividends add $789.
How much tax does $10,000 of investment income cost?
These are 2026 figures from our calculators, with $60,000 of other income and Ontario as the province.
| Type | How it enters your income | Extra tax on $10,000 |
|---|---|---|
| Interest | All of it | $2,965.00 |
| Non-eligible dividends | Grossed up by 15%, to $11,500 | $2,027.86 |
| Capital gain | Half counted as income | $1,482.50 |
| Eligible dividends | Grossed up by 38%, to $13,800 | $788.97 |
Each figure is the tax on top of what you’d already pay on $60,000. Nothing else changes.
Why does interest cost the most?
Because no discount applies. Interest from a savings account, GIC or bond lands in your income at face value, and your top slice of income pays the tax, which is why someone in the middle Ontario brackets loses close to 30 cents on each dollar, as the table shows.
You report it even if nobody sends you a slip. The CRA says you may not get a T5 when the total is under $50, and you still have to report it. With a compound GIC you report the interest earned in each complete year of the term, so the tax arrives long before the money does. Foreign interest goes on the same line 12100, converted to Canadian dollars, and you don’t subtract the foreign tax from it.
Want to see what a GIC really pays after tax? The GIC calculator gives the growth, and you can take the tax off the top using the rate above.
How do dividends get taxed?
Dividends from taxable Canadian corporations come in two kinds. For eligible dividends you multiply what you got by 138%, and for other dividends by 115%. That larger figure goes on line 12000, and the non-eligible part also goes on line 12010.
Then a credit comes off. The calculator shows $3,452.73 of credits on $10,000 of eligible dividends and $1,381.89 on the same amount of non-eligible ones. That’s why eligible dividends cost so little here. Non-eligible ones don’t.
One caution on the credits. We confirmed the gross-up percentages on a CRA page, but the provincial credit rates come from the last published worksheets, and 2026 forms may change them. Try your own numbers in the dividend tax calculator.
What about capital gains?
You report taxable capital gains that exceed your allowable losses on line 12700. The calculator counts half the gain, so a $10,000 gain adds $5,000 to income and $1,482.50 to your tax.
The proposed rise of the inclusion rate to two-thirds was cancelled in the Prime Minister’s release of March 21, 2025. We couldn’t find the 2026 rate itself stated on a CRA page, so 50% is our working assumption and you should check it before you sell something large.
A loss brings no tax in the calculator. Your main home is usually exempt, and the lifetime exemption for some small business and farm property is an option you switch on. For a sale, try the capital gains tax calculator.
What these numbers leave out
They compare a year with the income and a year without it, for one person in Ontario. Benefits that shrink as income grows aren’t included, and neither are credits you might claim. Registered accounts change the picture too, and the TFSA calculator covers room there.
Other provinces differ.
Where the numbers come from
The gross-up rates and reporting lines come from the Canada Revenue Agency pages on lines 12000, 12010, 12100 and 12700 for the 2025 return. The cancellation of the capital gains increase is from the Prime Minister’s news release of March 21, 2025. The tax figures come from our calculators using 2026 federal and Ontario data.
Frequently asked questions
Do I pay tax on interest if I get no T5 slip?
Yes. The CRA says you may not get a T5 when the total is under $50, but you still report the income.
Are dividends taxed less than interest?
Eligible dividends are, in our Ontario example: $789 against $2,965 on $10,000. Non-eligible dividends cost $2,028, so the gap depends on the type.
What are the dividend gross-up rates?
Multiply eligible dividends by 138% and other dividends by 115%. The CRA page for lines 12000 and 12010 gives both.
What is the capital gains inclusion rate for 2026?
We couldn't find it on a CRA page, so we assume 50%. The increase to two-thirds was cancelled by the Prime Minister's release of March 21, 2025.
Do I report foreign investment income?
Yes, on line 12100, in Canadian dollars. Don't subtract the foreign tax from the income, and claim it as a credit instead.
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Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.