Free tool

Salary or dividend: what reaches you.

For owners of an incorporated Ontario business. Enter the profit and slide between salary and dividends. See the cash that reaches you, the total tax and what each choice costs you later. Official 2026 rates, checked 13 November 2026.

Cash in your pocket with your mix

	All salary	Your mix	All dividends
Salary
Employer CPP
Corporate tax
Dividend
Personal income tax
Your CPP
Total income tax
CPP paid in, both halves
RRSP room created
Cash in your pocket

An estimate with the basic personal credits only. It does not weigh the pension that CPP buys.

How to read it

The cheapest answer is not always the right one

Canada's system is built so that a dollar earned through a company and paid out lands close to a dollar earned directly. Tax people call it integration. That is why the total income tax in the three columns is near the same, and why the real difference is CPP.

Buying a home in the next two years? Lenders read a T4 salary easily. Dividend income usually takes more history and more paperwork to prove. Owners often move to salary well before a purchase for this reason.
Want RRSP room? Only salary creates it. At the 2026 maximum that is room for CAD 33,810 of deductions next year.
Paying for child care? The deduction needs earned income. Dividends do not count.
Leaving profit in the company? This calculator pays everything out. If you can live on less, the profit you leave behind is taxed at the corporate rate only, until you take it. That deferral is often the largest advantage of being incorporated.
Bringing in family? Paying dividends or salary to a spouse or adult child has its own rules on split income and reasonable pay. Do not set it up without advice.

Ontario, 2026

All salary against all dividends, by profit

Company profit	Cash, all salary	Cash, all dividends	CPP not paid	Difference
$80,000	$58,324	$64,538	$8,551	$6,214
$120,000	$85,436	$91,195	$9,293	$5,759
$150,000	$102,568	$108,085	$9,293	$5,517
$200,000	$129,752	$134,641	$9,293	$4,889
$300,000	$178,855	$183,102	$9,293	$4,247

Non-eligible dividends: grossed up 15 percent, with a federal credit of 9.0301 percent and an Ontario credit of 2.9863 percent of the taxable amount in 2026. Sources: Canada Revenue Agency, Corporation tax rates; Ontario Budget 2026, Annex: Details of Tax Measures; Canada Revenue Agency, T4032-ON Payroll Deductions Tables, Ontario, effective 1 January 2026. Checked 13 November 2026. Planning figures, not advice for your company: the answer changes with other income, a spouse, passive investments and your year end.

Paying yourself from your company: your questions

Is it better to pay myself a salary or dividends?

On tax alone the two are designed to come out close. For an Ontario small business with CAD 150,000 of profit in 2026, all salary leaves about $102,568 in the owner's pocket and all dividends about $108,085. Most of that gap is the CPP you did not pay, which is also pension you did not earn. The right answer depends on what else you need: RRSP room, CPP, a mortgage, child care deductions.

Why do dividends look cheaper?

A dividend carries no CPP. On a salary, you and your company each pay CPP, close to CAD 9,300 combined at the maximum in 2026. That is the visible saving. The cost is a smaller CPP pension later and no new RRSP room.

What does a salary give me that dividends do not?

RRSP room (18 percent of salary, up to the yearly limit), CPP pension credits, a T4 that lenders read easily when you apply for a mortgage, and earned income for the child care deduction. Salary is also a deduction for the company.

Do owners pay EI on their own salary?

Generally no. A person who controls more than 40 percent of the voting shares of the company is usually not in insurable employment, so EI is not deducted. This calculator assumes that. If your shareholding is smaller, ask us.

What corporate tax rate does the calculator use?

A blended 11.7 percent for a calendar 2026 year: the 9 percent federal small business rate, plus Ontario at 3.2 percent until 30 June 2026 and 2.2 percent from 1 July 2026. It applies to the first CAD 500,000 of active business income. Change the rate in the box if your year or your income is different.

Is anything changing in 2027?

Yes. With the lower Ontario small business rate, Ontario is reducing its dividend tax credit on non-eligible dividends from 2.9863 percent to 1.9863 percent from 1 January 2027. The company pays a little less tax and the owner pays a little more on the dividend.