How Much Is Small Business Liability Insurance?
9 min
Taxes, payroll and business
Salary vs dividends
Compare five compensation mixes using the same company budget and your personal-tax assumptions.
2026 corporate tax and contributions · Personal tax uses your average rates
Your compensation
CAD
30% and 20% are editable examples, not tax schedules. Enter your effective average federal + provincial income tax rates, excluding CPP/QPP, EI and QPIP. For dividends, use the rate on cash received, already accounting for gross-up and credits. Your rates must reflect other income and deductions. This comparison does not calculate your personal tax return.
Non-eligible dividends are the usual choice for profit taxed at the small business rate. Eligible dividends require valid designation and sufficient GRIP; this comparison does not verify that balance. Adjust your average rate for the selected type.
Contributions and corporate assumptions
Employment with a corporation where you control more than 40% of voting shares is excluded from EI. Verify your status before selecting insurable employment.
Include costs applicable to salary: HSF/EHT, workers’ compensation and others. A default zero does not mean an exemption.
CAD
CAD
Canadian-resident CCPC, active business income, one establishment, owner fully subject to CPP/QPP and, in Quebec, QPIP. Salary budget includes deductible employer costs. Adjust small business limits for sharing, reductions and short fiscal years. Quebec SBD depends on your eligibility; default is 0%.
Your result
Net cash using your average rates
$141,287
All dividends
Highest net among these five scenarios: All dividends · $141,287
- Gross salary
- $0
- Employer contributions
- $0
- Corporate tax
- $23,392
- Dividends received
- $176,608
- Personal tax · assumptions
- $35,322
- Employee contributions
- $0
- Remainder retained in company
- $0
- Net cash available
- $141,287
- Grossed-up dividends · informational
- $203,099
- Potential RRSP room · 2027
- $0
Potential RRSP room created for 2027: 18% of 2026 salary, capped at $35,390, before pension adjustment and other adjustments. No RRSP contribution or deduction is assumed in net cash.
| Scenario | Salary | Employer contributions | Corporate tax | Dividends | Personal tax | Employee contributions | Net | Potential 2027 RRSP room |
|---|---|---|---|---|---|---|---|---|
| All salary | $195,354 | $4,646 | $0 | $0 | $58,606 | $4,646 | $132,101 | $35,164 |
| Salary budget: 75 % | $145,354 | $4,646 | $5,848 | $44,152 | $52,436 | $4,646 | $132,423 | $26,164 |
| Salary budget: 50 % | $95,354 | $4,646 | $11,696 | $88,304 | $46,267 | $4,646 | $132,744 | $17,164 |
| Salary budget: 25 % | $47,389 | $2,611 | $17,544 | $132,456 | $40,708 | $2,611 | $136,526 | $8,530 |
| All dividends | $0 | $0 | $23,392 | $176,608 | $35,322 | $0 | $141,287 | $0 |
Method and sources
Maximum salary fits its budget share including employer costs. The remainder pays corporate tax; after-tax profit is distributed as dividends. In the all-salary scenario, any rounding remainder stays in the company. Personal tax applies your average rates to cash received; dividend gross-up is informational and is not applied a second time.
30% and 20% are editable examples, not tax schedules. Enter your effective average federal + provincial income tax rates, excluding CPP/QPP, EI and QPIP. For dividends, use the rate on cash received, already accounting for gross-up and credits. Your rates must reflect other income and deductions. This comparison does not calculate your personal tax return.
Non-eligible dividends are the usual choice for profit taxed at the small business rate. Eligible dividends require valid designation and sufficient GRIP; this comparison does not verify that balance. Adjust your average rate for the selected type.
Potential RRSP room created for 2027: 18% of 2026 salary, capped at $35,390, before pension adjustment and other adjustments. No RRSP contribution or deduction is assumed in net cash.
Canadian-resident CCPC, active business income, one establishment, owner fully subject to CPP/QPP and, in Quebec, QPIP. Salary budget includes deductible employer costs. Adjust small business limits for sharing, reductions and short fiscal years. Quebec SBD depends on your eligibility; default is 0%.
CRA · Eligible and non-eligible dividends
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