Simulator · owner-manager pay
Salary or dividend: how to pay yourself
The answer depends less on tax than on your goals: RRSP room, QPIP eligibility, a mortgage. Tell us; the simulator suggests a mix and shows what each dollar costs.
Recommended mix
70% salary, 30% dividendSalary$63,000Dividend$27,000
70% salary (T4 / RL-1)30% dividend (T5 / RL-3)To build RRSP room (18% of salary). The dividend top-up avoids QPP/CPP on the part that builds no useful rights.
| For $90,000 paid | 100% salary | 100% dividend |
|---|---|---|
| Estimated personal taxRounded brackets, simplified | $28,300 | $24,338 |
| Corporate taxPaid before the dividend | $0 | $12,505.69 |
| QPP/CPP (employee + employer)Ceiling [amount] · rate [xx]% | $8,768 | $0 |
| QPIPQuebec only | $1,080 | $0 |
| Total tax costTaxes + contributions | $38,148 | $36,843.69 |
| Take-home (estimate)After tax and employee share | $56,776 | $65,662 |
| RRSP room created18% of earned income | $16,200 | $0 |
| QPIP / pension eligibleSocial benefits | Yes | No |
| Proof of income for a lenderT4 / RL-1 vs T5 / RL-3 | Strong | Variable |
| PaperworkSource deductions, slips | Monthly payroll + T4 | Resolution + T5 |
Indicative result, not binding · simplified. Rounded personal brackets, corporate tax at Quebec’s small-business rate (12.2%), dividend tax credit approximated by an integration factor, QPP/CPP and QPIP at [xx]% capped at [amount]. Ignores personal credits, CCA and TFSA. Confirm with your CPA.
Send by emailExport includes assumptions and rates.
What salary buys, what dividends avoid
Salary costs contributions but builds rights; dividends are simpler but build none. Reviewed by Sophie Lemieux, CPA.
RRSPEach dollar of salary creates 18¢ of room, up to the annual limit. Dividends create none.Salary wins
QPIP and QPPQuebec parental leave and the pension are based on salary. An owner paid in dividends doesn’t qualify.Salary wins
MortgageLenders want two years of T4s or assessments. Dividends count but are often discounted.Salary wins
SimplicityNo monthly remittances, no ROE, no employer QPP: dividends cost less to run.Dividend wins
FAQ
Parameters verified on [date] · Sources: CRA, Revenu Québec, Retraite QuébecWhy aren’t dividends simply taxed less?
Integration aims for salary and dividends to cost about the same once corporate tax is added. The real gap comes from contributions and rights, not rates.
Can I change the mix every year?
Yes. Salary is set through payroll, dividends by board resolution: adjust to your needs and the company’s situation.
Do I need a payroll account for salary?
Yes: a source-deductions number with the CRA (and Revenu Québec in Quebec), monthly remittances, T4 and RL-1 in February.
Can my spouse receive dividends?
Tax on split income (TOSI) rules sharply limit this since 2018. Ask your CPA before issuing shares.