Quick answer
Enter your corporation’s profit and what you plan to pay yourself, and this calculator works the same amount out two ways for the 2026 tax year: as a salary and as a dividend. Side by side, it shows the corporate tax, the CPP, your personal tax, the cash you keep, the RRSP room each creates and what stays in the company. It compares the scenario you enter and does not pick an amount or a mix, because the right one depends on facts it does not ask for.
Your scenario, both ways
Enter one scenario. The calculator pays you the same amount out of the same profit twice: once as a salary and once as a dividend.
Choose a province and enter the profit and the amount to pay yourself to see both columns.
This compares the scenario you entered and does not pick between the columns. The right mix depends on things it does not ask about: your RRSP plans, CPP, credits, when you need the cash and what else the corporation earns. Talk to us about the whole picture
It assumes you hold enough of the voting shares that your salary carries no EI, that you are single with no dependants, and that all of the profit is taxed at the small business rate. All of its assumptions. Nothing you enter leaves this page. It is not stored, sent or recorded.
Rates and where they come from
The calculator reads each rate from our rate registry, dated and checked against the page named beside it.
What does the calculator compare?
Both columns pay you the same amount out of the same year’s profit. Only the route changes.
- Salary. The corporation deducts your salary and its own CPP contributions on it as business expenses, and pays corporate tax on the profit left after them.1 It deducts your CPP from the pay and adds an equal amount as the employer.2 You pay personal tax on the salary, less the Canada employment amount that comes with employment income.3
- Dividend. A dividend is paid out of profit after the corporation’s tax, so the corporation is taxed on the whole profit first. The calculator treats it as a non-eligible dividend, the kind generally paid out of income taxed at the small business rate. On your return it is grossed up by 15%, and the federal and provincial dividend tax credits then reduce the tax.4,5 No CPP is paid on it, because CPP contributions are based on employment income.6
Under the two columns, the calculator adds the corporate and personal tax together for each, and shows what is left in the corporation. Tax on any other income you enter is the same either way, so it is left out of both.
Why do the two columns differ?
- What the corporation deducts. A salary and the corporation’s CPP on it reduce the profit it is taxed on. A dividend reduces nothing, so the corporate tax is higher in the dividend column.1
- CPP. A salary is pensionable: you and the corporation each contribute, and the more you contribute over your working years, the higher the retirement pension you build.6 A dividend carries no contributions at all, which means less paid in the year and no pension credit for it.
- RRSP room. A year’s earned income creates RRSP room for the next year: 18% of it, up to the next year’s dollar limit, which is $35,390 for 2027.7,8 The CRA works out earned income starting from employment income, and dividends are not part of it.9
- The gross-up and the credit. You are taxed on more than the dividend you received, then credited for tax the corporation already paid on that profit. Each province sets its own corporate rate and dividend credit, so the two layers rarely add up to exactly the tax on the same income paid as salary, and the gap varies with the province, the year and the income.
- Credits and premiums that follow the income. A salary carries the Canada employment amount; a dividend does not.3 In Ontario, a modest salary can also carry the low-income individuals and families tax credit, and both columns pay the Ontario Health Premium on taxable income, which counts a dividend at its grossed-up amount.10,11
What does it assume?
Every figure comes from the 2026 rates that the CRA and the provinces publish, read from the forms and tables listed under the calculator.12,13 Rather than ask more questions, the calculator states what it takes as given:
- You control more than 40% of the corporation’s voting shares, so your salary is not insurable employment and no EI is deducted or paid on it.14
- All of the corporation’s profit is active business income taxed at the small business rate, within the business limit of $500,000 a year for a corporation not associated with another.15
- The corporation’s year runs January to December. Where a rate changes during the year, the tax is shared out by the number of days each rate is in effect.15
- You are single with no dependants, and claim only the basic personal amount, the CPP credit and, on a salary, the Canada employment amount. Other credits and deductions would change both columns.
- Any other income you enter is taxed in full, like interest or rent, and is the same in both columns.
- The corporation pays no provincial payroll tax or workplace insurance premium on your salary.
In Ontario it also applies the four things the province adds to its bracket tax, in the order Form ON428 applies them: the Ontario surtax, the Ontario tax reduction, the low-income individuals and families tax credit on a salary, and the Ontario Health Premium.11,13
When it cannot give a figure it would stand behind, it says so instead. It does not cover provinces other than Ontario, Nova Scotia and Newfoundland and Labrador; a corporation above the business limit; a total income above $181,440, where the federal 29% bracket starts and minimum tax and a smaller basic personal amount come in; or a net income below $38,492, where the Canada workers benefit and the Nova Scotia and Newfoundland and Labrador low-income tax reductions apply.12,16,17
What does a Nova Scotia example look like?
Take a Nova Scotia corporation with $150,000 of profit in 2026, paying its owner $80,000, with no other income. Figures are rounded to the dollar.
| For 2026 | Salary | Dividend |
|---|---|---|
| Paid to the owner | $80,000 | $80,000 |
| The corporation’s CPP on it | $4,446 | $0 |
| The corporation deducts | $84,446 | $0 |
| Corporate tax | $6,883 | $15,750 |
| The owner’s CPP | $4,446 | $0 |
| The owner’s personal income tax | $18,248 | $14,377 |
| Cash the owner keeps | $57,306 | $65,623 |
| RRSP room for 2027 | $14,400 | $0 |
| Corporate and personal tax together | $25,131 | $30,127 |
| Left in the corporation | $58,670 | $54,250 |
Here the corporation and the owner together pay $4,996 more in income tax on the dividend, while the salary also carries $8,893 of CPP between the owner and the corporation, which the dividend does not. The owner keeps $8,317 more cash from the dividend, and $4,420 more stays in the corporation after the salary.
And the same scenario in Ontario?
| For 2026 | Salary | Dividend |
|---|---|---|
| Paid to the owner | $80,000 | $80,000 |
| The corporation’s CPP on it | $4,446 | $0 |
| The corporation deducts | $84,446 | $0 |
| Corporate tax | $7,667 | $17,544 |
| The owner’s CPP | $4,446 | $0 |
| The owner’s personal income tax | $14,342 | $8,000 |
| Cash the owner keeps | $61,212 | $72,000 |
| RRSP room for 2027 | $14,400 | $0 |
| Corporate and personal tax together | $22,009 | $25,544 |
| Left in the corporation | $57,886 | $52,456 |
Both columns include the Ontario Health Premium, $750 at these incomes, and the corporate tax is shared out by days because Ontario’s small business rate changed partway through 2026.15 The pattern is the Nova Scotia one: $3,535 more combined income tax on the dividend, the same $8,893 of CPP on the salary, $10,788 more cash for the owner from the dividend and $5,430 more left in the corporation after the salary.
What does the calculator leave to you?
It compares one scenario, and it never says which column to choose. The right amount, or the right mix of salary and dividends, depends on facts it does not ask for: whether you plan to contribute to an RRSP, how much CPP you want to build, your other credits and your household, when you need the cash, and what else the corporation earns and plans to keep. Many owners use a mix, and it can change from year to year.
That is a conversation we have with owners before year-end. Monthly bookkeeping shows the year’s profit as it builds, managed payroll runs the salary side, T4s included, and we prepare and file the corporation’s T2 return, so we can look at the whole picture with you. For how the two routes work in general, read salary or dividends.
Frequently asked questions
Is a dividend taxed less than a salary?
Not necessarily. The personal tax on a dividend is often lower, but the corporation has already paid more tax on the profit behind it, and the combined total depends on the province, the year and the amounts. The calculator shows both layers for the figures you enter.
Why is there no EI on the salary?
An employee who controls more than 40% of the corporation’s voting shares is not in insurable employment, so no EI premiums are deducted or paid.14 An owner with a smaller share would pay EI on a salary, which this calculator does not include.
Does it count the RRSP room I already have?
No. It shows only the room this salary creates for next year. Your own deduction limit also reflects earlier years, what you have contributed and any pension adjustment.7
Does the calculator keep what I type?
No. It runs in your browser, and nothing you enter is stored or sent anywhere.
Sources
- Business expenses, Canada Revenue Agency. Accessed .
- About the deduction of Canada Pension Plan (CPP) contributions, Canada Revenue Agency. Accessed .
- Line 31260 – Canada employment amount, Canada Revenue Agency. Accessed .
- Lines 12000 and 12010 – Taxable amount of dividends from taxable Canadian corporations, Canada Revenue Agency. Accessed .
- Line 40425 – Federal dividend tax credit, Canada Revenue Agency. Accessed .
- Contributions to the Canada Pension Plan, Employment and Social Development Canada. Accessed .
- How contributions affect your RRSP deduction limit, Canada Revenue Agency. Accessed .
- MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE, Canada Revenue Agency. Accessed .
- RRSPs and Other Registered Plans for Retirement (T4040), Chart 3, Canada Revenue Agency. Accessed .
- Low-Income Workers Tax Credit, Government of Ontario. Accessed .
- 5006-C ON428 – Ontario Tax, Canada Revenue Agency. Accessed .
- Indexation adjustment for personal income tax and benefit amounts, Canada Revenue Agency. Accessed .
- Payroll Deductions Formulas – 122nd Edition Effective January 1, 2026 (T4127), Canada Revenue Agency. Accessed .
- Responsibilities, benefits and entitlements for employees and self-employed workers, Canada Revenue Agency. Accessed .
- Corporation tax rates, Canada Revenue Agency. Accessed .
- 5003-C NS428 – Nova Scotia Tax, Canada Revenue Agency. Accessed .
- 5001-C NL428 – Newfoundland and Labrador Tax, Canada Revenue Agency. Accessed .
This calculator and page are general information about how things usually work in Canada, current as of the date last updated. They compare the figures you enter and aren’t advice about your own tax position, which depends on facts we haven’t seen.