7- Investment income comparison

A number of factors have to be considered when acquiring an investment, in particular the inherent risk as well as the individual’s risk tolerance. The after-tax rate of return is still often a determining factor in this regard. The following table presents a comparison of pre-tax returns on various investment categories. These calculations are based on the maximum marginal tax rate. Thus, in Quebec, an eligible dividend of 3.12% before taxes is equal to a 4% interest return before taxes, for a net tax return of about 1.9% in both cases.

⁷ Based on the assumption that the total capital gains realized by an individual in the year does not exceed $250,000 so that these gains are subject to the 50-per-cent inclusion rate for the year.