# Cap gains lower rate?



## mario 1 (Nov 6, 2009)

I was doing some calculations on U-file and noticed that the more cap gains 
I entered the higher my refund. to a point.
I'm guessing it relates to a higher div tax credit.
If I entered $3000 as my actual dividends my tax refund would be higher than if I entered $2000 and $1000 the refund was even lower.
If I entered $4000 I got a bigger refund that if I entered $1000.
Is that normal?


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## cardhu (May 26, 2009)

Which are you referring to? Capital gains or dividends? 

Capital gains would not produce the effect you’re seeing. Dividends can, in some cases.

The dividend tax credit produces a negative marginal rate for dividend income in the lowest tax bracket ... this means that every additional dollar of dividend income you take in reduces your overall tax owing ... the less tax you owe, the bigger your “refund”. 

Enjoy it while you can, this effect ceases to exist, in some provinces, in 17 months.


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## mario 1 (Nov 6, 2009)

Sorry a typo, forget cap gains. 
I meant dividends in both cases.


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