Salary vs. dividends vs. blend
$400,000 corporate income · $150,000 after-tax cash delivered · Ontario CCPC 2025
Salary
All compensation as deductible salary.
Total tax
$112,915
+$9,423 more than the blend
Delivered to you$150,000
Kept in the corporation$137,085
RRSP room created$32,490
CPP paid$8,860
New room is worth ≈ $16,193 as a deduction next year. CPP buys future CPP benefits — not pure loss.
Dividends
All compensation as dividends from after-tax corporate income.
Total tax
$103,520
+$29 more than the blend
Delivered to you$150,000
Kept in the corporation$146,480
RRSP room created—
CPP paid—
Lowest tax
Blend
The tax-minimizing salary/dividend mix.
Total tax
$103,491
Delivered to you$150,000
Kept in the corporation$146,509
RRSP room created$540
CPP paid—
New room is worth ≈ $269 as a deduction next year. CPP buys future CPP benefits — not pure loss.
Where each pre-tax dollar goes
every strategy starts from the same $400,000 — the bar height is identical; only the split changes
Net cash to you is identical across all three (that's the point). The differences are in tax, what stays in the corporation, and what you give up (RRSP room) or pay (CPP).
Total tax by strategy
corporate tax + personal tax + OHP + CPP
Total tax vs. salary level
why the blend wins — and how flat or sharp the trade-off is
RRSP-maximizing trade-off: paying a $180,500 salary maxes your RRSP room ($32,490) but costs $10,003 more total tax than the tax-minimizing blend. Registered room vs. pure tax-minimization is a real choice — worth a conversation.
Full comparison
every line item, all three strategies
| Salary | Dividends | Blend | |
|---|---|---|---|
| Corporate income | $400,000 | $400,000 | $400,000 |
| Corporate tax | $19,048 | $48,800 | $48,434 |
| After-tax corporate pool | $137,085 | $351,200 | $348,566 |
| Salary paid | $239,436 | $0 | $3,000 |
| Dividend — non-eligible | $0 | $204,720 | $202,057 |
| Dividend — eligible | $0 | $0 | $0 |
| Personal income tax | $84,106 | $53,820 | $54,157 |
| Ontario Health Premium | $900 | $900 | $900 |
| CPP (employee + employer) | $8,860 | $0 | $0 |
| Net personal cash | $150,000 | $150,000 | $150,000 |
| Total tax | $112,915 | $103,520 | $103,491 |
| Corporate retained | $137,085 | $146,480 | $146,509 |
| RRSP room created | $32,490 | $0 | $540 |
Assumptions & limitations
Ontario resident, single CCPC with full Small Business Deduction (no passive-income grind — see the Passive Income & SBD tool). Combined federal + Ontario 2025 rates. The eligible-dividend (GRIP) pool is modelled as the full general-rate after-tax pool; the basic personal amount is applied as a flat credit; the employee-CPP credit and enhanced-CPP deduction are ignored (salary tax is marginally conservative). Ignores income splitting / TOSI, AMT, the Employer Health Tax, and credits beyond the basic personal amount. RRSP room is generated this year and usable next year. Single-year snapshot — it does not value multi-year corporate deferral or the future tax on extracting retained earnings, nor the future benefit value of CPP.
This tool is for illustration purposes only and does not constitute financial advice.
See the terms of use for full disclaimers. Rates must be re-verified annually.