Despite the fact that a number of provincial budgets haven’t addressed the issue, there’s still hope for lower dividend taxes, says TD Bank.

“An air of pessimism is settling around the prospects for lower provincial taxation of dividend income on the basis of the provincial budgets so far,” it notes. “That is not an appropriate take,” it insists.

“True, only Alberta has proposed cutting its corporate income tax rate, limiting the scope of this avenue for leveling the playing field on taxation between corporate dividends and trusts,” TD allows. But, it notes that Quebec has specified the details of a new dividend tax regime that is fully consistent with that described by former Finance Minister Goodale last November. Also, British Columbia and Manitoba have committed to raising their dividend tax credit rates with details pending the federal legislation. “Realistically, that is all that could have been reasonably expected at this time,” it says.

“Unfortunately, the sequence of events unfolding will require patience and in some quarters that may be in dwindling supply. We will next need to see the federal legislation that accompanies a Spring 2006 Budget. That might not be passed until close to or even after many of the provincial legislatures rise for the summer. As such, provincial action might not be forthcoming until Fall 2006. But the interpretation from this source is that action to lower provincial dividend taxation will be coming,” TD concludes.