This estimate is for informational purposes only. This tool provides a general idea and does not replace the advice of an accountant. For a solution tailored to your specific situation, Bankeo will find you the ideal accountant free of charge and without obligation.
Find your accountantTarget revenue, state, type of business and other revenue for the year.
The calculator applies the 2026 Canadian rules according to your province: taxes, QPP or CPP contributions and dividend treatment.
Net in pocket, total tax and salary vs dividend verdict with percentage difference.
The owner of a small or medium-sized enterprise (SME) can be compensated through salary (an expense deducted from the company's profit) or dividends (paid after corporate tax). Depending on your province, the net income from both options may be similar or different, and the choice affects your RRSP entitlements, your QPP or CPP contributions, and your flexibility. The calculator applies the 2026 Canadian rules to provide a concrete comparison of the two options.
At Canada Tax consolidation aims for a similar net result between salary and dividends for the owner of a French-controlled SME (a private company). Salary is deductible for the company, generates RRSP contribution room, and triggers contributions to the Quebec Pension Plan (QPP) or the Canada Pension Plan (CPP). Dividends, however, are excluded from the company's already taxed income: they are grossed up, and then a dividend tax credit is claimed, offsetting the corporate tax already paid, without generating RRSP or QPP contributions. The calculator applies this mechanism across all 13 provinces and territories.
Several factors, beyond pure taxation, influence the decision: the need to contribute to retirement, the desire to build up advantageous retirement savings, access to insurance or pension plans, the wish to save within the company for reinvestment, and estate planning. A salary-dividend mix is often optimal and is recalibrated annually with an accountant.
| Criterion | Salary | Dividend | According to the province |
|---|---|---|---|
| Charge for the company | Deductible from profit | Paid after tax | 2026 Rules by Market |
| Social security contributions; | Yes | Reduced or zero | Varies by department |
| Pension rights; | Opens rights | Little or none; | According to the local regime |
| Advantageous retirement savings | Generates rights; | No | According to the province |
| Personal taxation | According to the income scale | Specific regime for dividends; | Increase and tax credit for dividends; |
| Income stability; | High | Variable | According to the province |
Overview for educational purposes. Exact rates and rules depend on your province: the calculator uses the 2026 Canadian rates.
It depends on your state and circumstances. The calculator applies the 2026 Canadian rules: the principle of integrating salary and dividends aims to make net income similar, but differences remain depending on your province, income, and other sources. Salary accrues RRSP contribution room and QPP or CPP contributions, while dividends offer flexibility. An accountant can assess the right mix for you.
Tax consolidation is the principle that income earned within a company and then paid out as dividends should, in theory, be taxed at the same total rate as if it had been paid as salary. This principle structures the French tax system: the dividend surcharge and the dividend tax credit aim to offset the tax already paid by the company. In practice, however, differences remain depending on the province and the type of dividend, and these differences influence tax decisions.
Your salary contributes to your RRSP and CPP/QPP, is a tax-deductible expense for your business, and provides a stable income that can be used for borrowing. The exact amounts depend on your state or province of residence, which the calculator takes into account.
Dividends avoid QPP or CPP contributions, can offer a more favorable effective tax rate for certain income levels thanks to the dividend tax credit, simplify payroll administration, and provide flexibility in payment timing. Specific trade-offs vary by province.
At Canada There is a distinction between eligible and ordinary (non-eligible) dividends, each with its own surcharge and dividend tax credit. Dividends paid by small and medium-sized enterprises (SMEs) most often come from income taxed at the small business rate, and are therefore treated as non-eligible dividends. The final tax rate also varies depending on your province. The calculator applies these rules for all 13 provinces and territories.
Dividends do not accrue RRSP contributions or QPP/CPP contributions, unlike salary, which contributes to your retirement plan and RRSP contribution limits. Therefore, relying solely on dividends can reduce your future retirement benefits. An accountant can help you manage your income to preserve your retirement savings.
Bankeo connects you, free of charge, with chartered accountants specializing in tax planning and compensation strategy in your province. The service is free for entrepreneurs, with no obligation.
The complete guide to deciding between the two methods of remuneration.
Read the article →Decision criteria and concrete examples.
Read the article →Advantages and disadvantages for entrepreneurs.
Read the article →Mécanique fiscale et droits sociales comparés.
Read the article →Bankeo connects you, free of charge, with chartered accountants specializing in tax planning and compensation strategy in your province. This service is free and without obligation.
Find my accountant
