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Dividends are making some Canadians — the top 1% — proportionally richer.

StatsCan data reveal that the top 1% of tax filers saw their share of total income rise by almost one percentage point from 2014 to 2015, thanks to a sharp increase in dividend income from Canadian corporations.

In 2015, the top 1% of tax filers received on average $102,300 of dividend income, up sharply from $66,700 in 2014.

It’s the first increase in the share of total income going to the top 1% since 2006.

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As of the late 1990s, dividends overtook interest and investment to become the second most important income source (after employment income) for the top 1% of tax filers, says StatsCan in its report.

From 1982 to 2015, the top 1% of tax filers received on average about 40% of total dividend income from Canadian corporations.

For the 1% increase in income share for 2015, dividends accounted for 0.7 percentage points, and employment income accounted for the remaining 0.2 percentage points.

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Tax paid by the top 1%

The top 1% of tax filers paid on average $183,000 in income taxes to the federal, provincial and territorial governments in 2015, up 13.5% over 2014. They accounted for 22.2% of total income taxes paid by all tax filers, up from 20.5% in 2014 but below the peak of 23.3% in 2007.

To be in the top 1% in 2015, a tax filer must have earned a total income of at least $234,700. Just under 270,930 Canadian tax filers were in the top 1%.

To be in the top 5% required a total income of $120,100; to be in the top 10%, $92,800.

The median total income of all filers in 2015 was $33,400.

Read the full StatsCan report.

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Tax items to discuss with clients before year-end

Originally published on Advisor.ca
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