E&Y have analyzed Ontario tax rates as of 2011-1-15 and we may draw some conclusions from these data:
| Investors | Taxable Income | Marginal Rate on Interest | Marginal Rate on Dividends | Equivalency Factor |
| Widows & Orphans | $30,000 | 20.05% | 0.00% | 1.25 |
| Professionals | $75,000 | 32.98% | 11.72% | 1.32 |
| Plutocrats | $150,000 | 46.41% | 28.19% | 1.34 |
Equivalency factors have declined slightly since my 2010 post on this topic
Two nuances should be noted. Firstly, E&Y appears to have put a floor of 0.00% on the published marginal tax rate for dividends; in fact, the tax on dividends can be negative if the taxpayer has other income available to soak up the excess dividend tax credit. This will increase the equivalency factor for “Widows & Orphans”.
Secondly, if the taxpayer is subject to OAS clawback, the equivalency factor will decline by about 0.1. It should be noted that this figure is an extremely rough estimate and is based solely on the direct income tax effect – there may be other net-income-tested benefits to the taxpayer, such as drug plans, which will exacerbate the decline.
[…] now yield 5.61%, equivalent to 7.28% at the now standard equivalency factor of 1.3x. Long Corporates now yield about 5.5%, so the pre-tax interest equivalent spread is now about […]
Would you be so kind, PLEASE, to tell me what the equivalency factor is in BC. Being mathematically challenged, I could spend all night working on it and still get it wrong.
Sorry, I just noticed you’ve got a post providing the factor for BC.
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