705-722-5519

From Our Blog

Salary vs. Dividend - Does it really matter?

Posted on June 01, 2021

Salary vs. Dividend - Does it really matter?

Have you ever wondered what the difference between a salary and a dividend is?

The Canadian Tax System is designed so that an individual should be indifferent between earning a salary versus a dividend from a corporation.

Attached are examples of the after tax dollar for the individual when paying a Salary versus paying a Dividend.

Examples of comparative charts between Salary vs. Dividend

Some of the key points of Salary are as follows:

  • Potential to reduce corporate taxable income of a corporation if they exceed the Small Business Deduction Limit thus not paying tax at higher corporate tax rates.
  • Tax withholdings required in the corporation including potentially an employer portion of CPP and EI. The tax withholdings are required to be remitted regularly each month/quarter.
  • Creates RRSP contribution room to plan for retirement.

Some key points for Dividends are as follows:

  • May require quarterly personal tax installments depending on amount paid each year and the personal tax payable
  • Dividends are simple and can be withdrawn at any time
  • Dividends do not affect taxable income of the corporation

There are tax planning opportunities that may make dividends or salaries preferable in specific circumstances.

Please see for more details.

Get in touch

Book a 15 Minute Video Meeting With An Expert Today

Book Now

Please, enter a valid value