Salary vs dividends calculator
| Item | All dividends | Mix | All salary |
|---|
Mix = the salary you entered, with the rest of the profit paid as dividends.
Change the numbers to see your estimate.
How this estimate works
The calculator compares three ways to take the same company profit out this year: all as non-eligible dividends, a salary you choose with the rest as dividends, and all as salary. Profit paid as dividends is first taxed in the company at the small business rate: 11.2% in Ontario for 2027, or a blended 11.7% for a 2026 calendar year-end.
It uses 2026 federal and Ontario personal tax rates for an Ontario resident with no other income, including the Ontario Health Premium, and 2026 CPP contributions on salary (up to $74,600, plus the second tier up to $85,000), paid by both you and the company. EI isn’t included because owners who control more than 40% of the voting shares generally aren’t insured, and most small employers pay no Employer Health Tax. It leaves out RRSP deductions, other credits and income, and the rules on dividends paid to family members, so treat it as a starting point, not advice.
What the numbers don’t show
- Salary builds your CPP retirement pension, creates RRSP room, and gives you employment income that lenders like to see on a mortgage application.
- Dividends are simpler: no payroll remittances, T4s or CPP, and often more cash today.
- Most owners end up with a mix, reviewed every year. See tax planning for business owners.
Common questions
Why do dividends often leave more cash?
Mostly because dividends don’t carry CPP contributions, which on salary are paid by both you and the company. Those contributions aren’t lost: they build your CPP retirement pension.
How much salary should I pay myself?
It depends on what you need to live on, whether you want RRSP room and CPP, and how much the company earns. Some owners pay a salary up to the CPP maximum and take the rest as dividends; others take only dividends. We model it with you every year.
Can I pay dividends to my spouse or children?
Only in limited cases. The tax on split income (TOSI) rules tax most dividends paid to family members at the top rate unless an exception applies, such as a spouse once the owner is 65 or family members who work in the business regularly.
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