Salary or dividend;

In an incorporated company, you choose how you pay yourself: salary or dividends. A salary is an expense for the company (it pays less tax) and contributes to your retirement: RRSP (Registered Retirement Savings Plan) and QPP (Quebec Pension Plan) entitlements. A dividend is a share of the profits paid out without these benefits.

Brief

Salary: a deductible expense for the company (it reduces its tax) which builds your retirement (RRSP, retirement savings plan; RRQ, Quebec public pension plan)
Dividend: paid directly from profits, without payroll taxes (mandatory contributions), but without RRSP or QPP benefits
Often, the best solution is a mixture of both
The right amount depends on how much money you need today and how you plan for your retirement tomorrow.

Why does this matter?

Let's take two business owners who withdraw $80,000 from their company: depending on whether they pay themselves a salary, a dividend, or a combination of both, their tax bill and retirement savings can differ by several thousand dollars per year. A salary entitles you to RRSP contributions (the 2026 limit is approximately $33,810, or 18% of earned income) and a Quebec Pension Plan (QPP) pension; a dividend avoids payroll deductions but doesn't grant these entitlements. This is a decision where a simple calculation can yield significant results. Bankeo will connect you with a certified accountant or CPA (Chartered Professional Accountant) free of charge to calculate both scenarios for you. We're here to support you every step of the way.

Frequently asked questions

What, in concrete terms, is a salary or a dividend?

These are the two ways your company can pay you money. Salary is a regular paycheck, with deductions, like an employee's. Dividends are a share of the profits that the company pays you as an owner (shareholder), without payroll deductions.

Does the dividend open up retirement rights (RRSP, QPP)?

No. Only salary (earned income) entitles you to contribute to an RRSP (your personal retirement savings plan) and to the QPP (Quebec's public pension). Dividends do not grant either of these entitlements. This is a key factor in the decision.

How can I know what the right dosage is for me?

The best mix depends on the money you need now and the retirement you're aiming for. The only reliable way is to calculate both scenarios. Bankeo will connect you with a verified accountant or CPA, free of charge, who will perform this calculation for you. We're here to support you every step of the way.