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Early Retirement on Dividend Income, which Province is the Best?

Every year when winter strikes in Newfoundland, my wife and I always ask the same question “what would it be like to live somewhere else?”.  While my wife and kids dream of enjoying a warm beach in Florida, my mind on the other hand, wonders to jurisdictions with lower taxes and a lower cost of living.

It’s unlikely that we’ll change provinces while the kids are in grade school, but it’s possible once they reach post secondary education.  Thinking ahead 15 years from now, both kids will be well underway in their post-secondary pursuits, and our dividend portfolios should be a substantial size and more than enough to support our lifestyle.

When we do decide to call it quits from regular salaried work, our tax picture will change substantially.  Not only will our income tax change from salaried income to investment income, our taxes owed will vary depending on which province we live in.

Lets look at varying dividend income scenarios. Assuming that my wife and I split the income, what would our taxes look like in different provinces?  Using an online tax calculator, I ran some numbers and this is what I came up with. Note that I’m assuming 2016 tax rates and that eligible dividends are our only income source.

 Province $60,000 $70,000  $80,000  $100,000  $120,000  $140,000
 NL $1,148 $2,128 $3,108  $5,068  $10,764  $16,367
 NS $0 $756  $1,598  $3,620  $9,432  $15,122
 PE $0 $0  $0  $776  $6,141  $11,325
 NB $0 $0  $0  $0  $3,644  $7,113
 QE  $1,793  $1,980  $2,910  $5,146  $9,713  $15,599
 ON $900 $1,050 $1,200  $1,200  $4,700  $7,977
 SK $0 $0  $0 $0  $3,511  $6,922
 MB $751 $1,407 $2,062  $3,559  $9,664  $15,670
 AB $0 $0 $0 $0  $3,225  $6,513
 BC $0 $0 $0 $0  $3,200  $6,477
 NT -$1,359 -$1,530  -$1,668  -$1,884  $1,532  $4,902
 NU -$1,656 -$1,932  -$2,208  -$2,400  $1,016  $4,386
 YT $0 $0  $0 $0  $3,372  $6,723

Running these numbers came with a number of surprises, namely the low taxation of dividends in the territories and New Brunswick, and also that Newfoundland is among the highest in income tax.  I also find it quite impressive that a couple can make up to $100k in dividend income and pay $0 in taxes in highly populated provinces like BC and Alberta.

As previously mentioned, looking forward 15 years or so, I imagine that our financial picture will be different than today.  My current financial freedom goal is $60k in dividend income in about 5 years.  If that goal is reached, it’s possible that in 15 years, our dividend income could approach $100k.  At that level, considering weather, lifestyle and family, it looks like Ontario and BC are attractive options.

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FrugalTrader About the author: FrugalTrader is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 24 comments… add one }
  • SST January 11, 2016, 11:32 am

    You had better be getting $100k in dividends if you’re considering B.C. — B(ring) C(ash).

    All the retirement hotspots (and Lower Mainland) are insanely priced and the rest of the province gets typical Canadian winter weather.

    Consider foreign options.

    • FrugalTrader FrugalTrader January 11, 2016, 1:15 pm

      Good point SST. Do you have any favourite foreign options?

  • crashten January 11, 2016, 1:58 pm

    Too bad you added weather to your list of considerations… otherwise Saskatchewan could part of your retirement dream based upon that chart above. Just remember, those of us in the prairies are fond of a particular saying (mostly to rationalize why we live here each winter) that I’ll put it out there for you to consider. Remember, “it’s a dry cold.”

    • FrugalTrader FrugalTrader January 11, 2016, 2:15 pm

      Is “dry” cold a good thing?

      • yettie January 11, 2016, 4:50 pm

        Speaking as a Nigerian who moved to Canada recently and has lived in NL and AB, “dry cold” is a GREAT thing.

        Living in St John’s the winter temperatures seemed moderate but the high humidity means the cold gets into your bones very quickly. Not so in Calgary. The discomfort of Calgary at -25C is equivalent to the discomfort of St John’s at -10C in my opinion

        • FrugalTrader FrugalTrader January 11, 2016, 8:08 pm

          Thanks for the perspective. I spent a winter in Ottawa and recall experiencing a different kind of cold than NL. I recall being told to make sure to cover my skin or else it will freeze!

          • Pierre January 12, 2016, 12:37 am

            Having moved from Montreal to Calgary 18 months ago I can attest to the “dry cold” thing… Also Chinook winds can make southern Alberta surprisingly warm in winter: https://en.wikipedia.org/wiki/Chinook_wind

            Last year we had <5 days below -20C, most days it went at least above freezing for a few hours :)

            Great information as always, thanks!

  • Bernie January 11, 2016, 2:10 pm

    We also live in NL, and we talk often about living somewhere else. With a primary school child it will likely happen later, if at all. If Oil doesn’t rebound in a couple of years, the debt of this province will be such a burden on the minority of tax payers, that leaving may become a more attractive option.

    • FrugalTrader FrugalTrader January 11, 2016, 2:16 pm

      Hi Bernie, I hear ya! I feel the same way about the coming debt burden and the inevitable rise in taxes. I’m in wait and see mode!

  • Dividends on the Prairies January 13, 2016, 4:21 pm

    Great article. It was nice to see our province (SK) in the running for the lowest taxes. But yes, the long winters are still a problem!
    I’m assuming that this table only works if your nest egg (which is producing the dividends) is entirely non-registered (not RRSPs or pension money) because otherwise you’d have to worry about withdrawal rules etc that comes with registered money?

    • FrugalTrader FrugalTrader January 13, 2016, 4:23 pm

      That is correct, it assumes either non-registered or TFSA dividend withdrawals. As you said, RRSP withdrawals are taxable as income.

  • Sasha January 15, 2016, 10:48 am

    come to Ontario baby, buy a condo in downtown Toronto and call it a day.

  • Formative Fortunes January 16, 2016, 12:18 pm

    BC is beautiful and if you can make 100k on dividends income and not pay taxes living in a beautiful area i dont think there is a better choice. Good luck growing the passive income!

  • D2cold January 16, 2016, 8:46 pm

    Don’t forget its only Canadian dividends too as US div is considered as regular income and may likely screw up your above scenario. I ran this screen years ago for fun and BC is my first choice. Probably not Vancouver but within an hour or so from Kelowna. Better weather and less rain. Not to take away from your site but taxtips.ca is a fantastic site for our tax info.

    • FrugalTrader FrugalTrader January 17, 2016, 5:33 pm

      Good point D2cold. Are you also a dividend investor working towards early retirement?
      And yes, I agree with your taxtips.ca recommendation, use them all the time.

      • D2cold January 17, 2016, 5:58 pm

        Dividends not so much. I look for anything that has the best growth, including dividends. I just thought it was a neat exercise to try and make a “safe and diversified” portfolio of only Canadian dividend paying companies.

  • BeSmartRich January 22, 2016, 5:38 pm

    Alberta and BC killed it. Ontario isn’t too bad but considering our targeted dividend income is around $50-70K, living in my second hometown Nova Scotia isn’t doing too bad in that range. Good summary. Thanks as always!


  • Wayne January 25, 2016, 6:10 pm

    Favourite foreign destination – Costa Rica. First class health care. Lived there over several months.

  • Tom Drake January 27, 2016, 7:05 pm

    I look forward to welcoming you to Alberta, see you in a few years! ;)

  • Trent January 31, 2016, 2:07 pm

    FrugalTrader. Just wanted to give you the heads up that once you go over 40K + federal personal tax credit (of just over 10K) of actual dividend income (not grossed up) you would be subject to the AMT if the federal liability is nil.

  • DAvid March 29, 2016, 10:55 pm

    The cost of living in smaller town BC can be much cheaper than in the large centres, and in my experience, anywhere in southern BC sees much nicer weather than I experienced during my years in St. John’s. If it works for you, make the move; I doubt you’ll regret it.


  • FrugalTrader FrugalTrader March 30, 2016, 8:49 am

    Hi DAvid! Good to hear from you, always nice to hear from readers who have been around for a while. I’ve heard that the weather in BC is among the nicest in Canada! Do you have any recommendations on towns/cities in BC that have great weather, but affordable?

    • DAvid March 30, 2016, 1:17 pm

      There are so many small towns up-island on Vancouver Island, or in the interior of BC, south of Kamloops, that narrowing it down becomes a challenge. It also depends how large a community you want to live in. Some that stand out to me include: Salmon Arm, Vernon, Osoyoos, Penticton, in the Okanagan Valley; Nelson, Creston, Kimberley in the Kootenays, and towns surrounding Nanaimo on Vancouver Island.

  • Al August 5, 2016, 3:25 am

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