Updated Checked by the Tax-Services.ca editorial team How we check
Professional corporation accounting comes down to three habits: keep the corporation’s money completely apart from yours, record every payment you take out as salary, dividend or loan, and file the T2 return within six months of year end. Do those, and most of the work is routine. On $150,000 of profit in Ontario the corporation owes about $17,544 for calendar 2026, which is 11.7%.
What makes a professional corporation different to keep books for?
For tax, it’s mostly a normal private corporation. The federal rate on the first $500,000 of active business income is 9% for a Canadian-controlled private corporation that claims the small business deduction, and 15% above that. Provinces add their own rate.
What differs is who’s allowed to own it. Each regulator sets its own rules on who can hold shares and how the corporation must be named and insured. We couldn’t confirm those rules for any profession here, so read your regulator’s page before you incorporate.
| Item | 2026 figure |
|---|---|
| Federal rate, small business deduction | 9% on the first $500,000 |
| Federal general rate | 15% |
| Ontario combined rate, small business | 11.2% from 2027, about 11.7% for a calendar 2026 year |
| Ontario combined rate, general | 26.5% |
| T2 return due | Six months after year end |
| Balance owing due | Two months after year end, three for a CCPC that claimed the small business deduction |
How should you keep your money and the corporation’s apart?
Open a dedicated business bank account and a business credit card, and use them for everything the corporation earns or spends. Then never pay a personal bill from either one.
This is the habit that saves the most trouble. When a personal cost goes through the corporation, someone has to decide later whether it was salary, a dividend or a loan to you, and each choice has tax consequences. A shareholder loan has its own tax rules, so ask your accountant how it’s treated before you let one build up.
Good software helps, but only if you keep it current. Enter invoices and expenses as they happen, or at least monthly, so the year-end statements don’t hold surprises.
What does salary cost compared with dividends?
You get paid from the corporation in two main ways, and the tax works differently for each.
Salary is a deductible expense for the corporation, and it comes with payroll deductions. For a $3,000 pay period in Ontario, the payroll remittance calculator shows $961.03 to remit, including $228.41 as the employer share. Those remittances are your job now, on time, every period.
Dividends come out of profit after corporate tax. The dividend tax calculator shows that $10,000 of eligible dividends adds $788.97 of personal tax for an Ontario resident with $60,000 of other income. The type of dividend your corporation pays changes that answer, and we can’t say which applies to you. Your accountant can.
Paying dividends to a family member who doesn’t work in the business is riskier. The tax on split income can apply to it and take the benefit away.
For the corporation’s own bill, try the corporate tax calculator. At $600,000 in Ontario it shows $84,980, or 14.2%, because the amount above $500,000 is taxed at the higher rate.
What limits and mistakes catch people out?
The $500,000 limit isn’t always yours alone. Associated corporations share it. It can also shrink if the corporation earns a lot of investment income, starting at $50,000 and reaching zero at $150,000, so leaving a large pile of profit invested inside the company has a cost.
Other common slips are missing the payroll remittance date, deducting personal expenses, and treating the corporation’s cash as your own. A sole proprietor’s tax is a different animal. On $80,000 of net income, the self-employed tax calculator shows $22,126 of income tax and CPP. Comparing that figure with a corporate structure only makes sense with your real numbers and a proper plan.
The corporate calculator ignores taxable capital rules, credits and salary you pay yourself, and it handles associated companies through an optional box. Tick the payout option to add personal tax on dividends. Treat its answer as a starting point.
Records matter, too. You must keep them for six years from the end of the last tax year they relate to.
When do you need an accountant?
Before you incorporate, and again at the first year end. A professional corporation has a T2 return, payroll and usually GST/HST as well, and errors on any of the three carry penalties. Pick someone who already handles corporations in your field, and ask what the fee covers before you agree. We couldn’t confirm typical fees, so we don’t quote any.
Where the numbers come from
Federal rates, the $500,000 business limit and the filing dates come from Canada Revenue Agency pages on corporation tax rates and the T2 return, checked in September 2026. The Ontario rates follow the CRA’s Ontario pages, including the cut to the small business rate on 1 July 2026. The examples come from our own calculators and use 2026 figures.
Frequently asked questions
When is a corporation's T2 return due?
Six months after the end of the tax year. The tax owing is due sooner, usually two months after year end, or three months for a CCPC that claimed the small business deduction.
What is the federal tax rate for a professional corporation?
A Canadian-controlled private corporation pays 9% federal tax on the first $500,000 of active business income if it claims the small business deduction. Above that, the general rate is 15%.
Can I pay personal bills from the corporation's account?
You shouldn't. Each one must later be treated as salary, a dividend or a shareholder loan, and each has its own tax result.
Do I share the $500,000 limit?
You do if the corporation is associated with others. The limit can also shrink when investment income passes $50,000 and reaches zero at $150,000.
Who can own shares in a professional corporation?
That depends on the regulator for your profession and your province. We couldn't confirm the rules for each one, so check your regulator's website.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.