2017 Interest-Rate Equivalents

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Definitions:

Annual Divided Yield

Enter the dividend yield you can earn on the investment you want to compare.

Where Do You Live?

From the drop-down menu select the province or territory you are resident in for income tax purposes. Dividend income is taxed differently in each province & territory.

Your Income Level

There are four income levels for you to choose from. From the drop-down menu select the number that is closest to your income before you deduct income taxes.

Multiplier

The multiplier is simply a ratio that compares after-tax dividend income to after-tax interest income. Because interest income is taxed at a higher rate than dividend income, when comparing two different investments - one paying dividends and one paying interest - your calculations must be adjusted for the affect of taxes on the investment's income.

Interest Rate Equivalent

This is the interest rate (yield) an investment would need to pay you so that you will have the same income, after paying income taxes, as you would from an investment paying a specific dividend yield. For a greater discussion of Interest Rate Equivalents, visit Interest Rate Equivalents, in the Classroom.

 

 

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