Salary vs Dividend Calculator
Compare salary vs dividend compensation strategies for your business. This calculator helps you understand the tax implications, take-home pay, and optimize your compensation mix.
Business Inputs
How to Use the Salary vs Dividend Calculator
- Enter your corporate revenue for the year
- Select your province (for accurate tax rates)
- Use the slider to adjust the distribution between salary and dividend
- Review your personal tax results and corporate income statement
- Compare different scenarios to find the optimal mix
Why Use Our Salary vs Dividend Calculator?
- ✓ Compare salary vs dividend tax implications
- ✓ Calculate take-home pay for different scenarios
- ✓ Understand CPP/EI and RRSP implications
- ✓ Optimize your compensation strategy
- ✓ Free to use - no signup required
- ✓ Essential tool for business owners
Frequently Asked Questions
What is the difference between salary and dividend?
Salary is employment income subject to CPP/EI contributions and regular tax rates. Dividends are distributions from corporate profits that receive preferential tax treatment through dividend tax credits, but don't generate CPP/EI benefits or RRSP room.
Which is better: salary or dividend?
The optimal mix depends on your income level, province, and personal circumstances. Generally, dividends can be more tax-efficient at lower income levels, while salary provides CPP/EI benefits and RRSP room. A combination often works best.
Do dividends count toward RRSP contribution room?
No, dividends do not generate RRSP contribution room. Only employment income (salary) and self-employment income generate RRSP room. This is an important consideration when choosing your compensation mix.