How is my investment income taxed?

When you have non-registered investment accounts, there is typically income associated. Understanding the types of investment income and how the CRA taxes these income types is important in an investor’s financial journey. This infographic summarizes this information so that you can have a good understanding of how it works.

Taxes on investment income

Common types of investment income

Interest
Dividends
Capital gains

What are they and how are they taxed?

Interest

Description: Earned through assets like bonds, GICs, and treasury bills

How it is taxed: Fully taxable at the identical marginal tax rate to that of your regular income

Dividends

Description: Occurs when you have invested in shares of Canadian corporations that pay dividends

How it is taxed: Preferential tax treatment for individuals through dividend tax credits as either eligible or non-eligible dividends

Capital gains

Description: This is triggered when an investment within the fund is sold at more than the cost base

How it is taxed: Only 50% of a capital gain is taxable

This only applies to non-registered accounts and is not an exhaustive list. A tax specialist should be consulted if you have questions.