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An Ontario corporation with $150,000 of profit to pay out leaves its owner about $102,600 after all tax as salary, $110,635 as non-eligible dividends, and $105,339 as eligible dividends from profit taxed at the general rate (2026 estimate). Salary trails non-eligible dividends by $8,035, before counting the CPP and RRSP room that only salary creates.
It’s a simplified estimate for a small Canadian-controlled private corporation with no other income and no investments inside the company, and it assumes all the profit is paid out this year.
How much do I keep from non-eligible dividends?
Non-eligible dividends come out of profit already taxed at the small business rate, a combined 9% federal plus the provincial rate, about 11.7% in Ontario. The company pays $17,544 of tax on the $150,000 and has $132,456 left to pay out. Personal tax on those dividends, after the 15% gross-up and the dividend tax credit, is $21,821, so you keep $110,635, or 74%. No CPP is paid and no RRSP room is created. The credit rules are on the Canada Revenue Agency: line 40425 page.
How much do I keep from a salary?
The company deducts the pay and its half of CPP, so it pays no corporate tax on the profit, and you pay personal income tax on the salary. In the example the owner is paid $145,354 and the company pays $9,293 of CPP between both halves. Personal tax on the salary is $38,108, which leaves $102,600, or 68% of the profit. The salary also builds RRSP room of 18% of pay, up to the 2027 limit of $35,390. Here that room is $26,164.
Why are eligible dividends often worse for a small company?
They come from income taxed at the general corporate rate, 15% federal plus the provincial rate, 26.5% in Ontario. That leaves $110,250 to pay out and $39,750 of corporate tax. The owner pays $4,911 of personal tax thanks to the 38% gross-up and a larger credit, and keeps $105,339, or 70%. Most small companies under the $500,000 small business limit pay non-eligible dividends, so this column mostly matters for income above the limit. Each province’s rates are on the Canada Revenue Agency: corporation tax rates page.
Does the winner change by province?
It can. At $150,000 of profit, Alberta gives $105,360 from salary and $111,032 from non-eligible dividends. Dividends still win there, but the gap is $5,672. Small business rates and dividend credits differ by province, which is why the calculator compares all of them. The corporate tax calculator shows the company side alone, and the dividend tax calculator covers the personal side.
What does this simplified estimate leave out?
Investment income inside the company, the capital dividend account, other personal income, family members, the lifetime capital gains exemption, EI, employer health taxes and the benefit of leaving money in the company. It doesn’t claim perfect integration of corporate and personal tax, and it treats all the profit as paid out this year. A bookkeeper or accountant can model your own mix of salary and dividends.
Where does this information come from?
Corporate rates, the dividend credit and the RRSP limit come from the Canada Revenue Agency pages linked above. Corporate and personal tax amounts come from this site’s own 2026 tax engine. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
Do dividends build RRSP room or CPP?
No. Only salary counts as earned income for RRSP room, at 18% of pay up to the yearly limit, and only salary is pensionable for CPP. An owner who takes only dividends builds no new RRSP room and no new CPP benefit.
What salary is needed to max out CPP?
About $85,000 for 2026: CPP maxes out at the $74,600 earnings ceiling plus the second tier up to $85,000. Both halves together cost $9,293, the figure in the example, and contributions stop growing once pay passes $85,000.
Is the small business rate the same in every province?
No. The federal rate is 9% on the first $500,000 of active business income, but the provincial rate varies, from nil in Manitoba and Yukon to 3% in Nunavut in the data this calculator uses. Combined, the lowest and highest differ by several points.
Why not take all profit as dividends every year?
Some owners do, and the example shows it can leave more cash today. But dividends build no RRSP room and no CPP, and the figure ignores investment income and future planning. Treat the answer as one input and ask an accountant about your own situation.