Salary vs. dividend
Compare the net personal amount when active business income is extracted as salary or as a dividend.
Prepared by Groupe Conseil Sabin Painchaud
Prepared on September 21, 2026
Salary vs. dividend — holding/operating corporation
Your parameters
QPP contributions (employer + employee): 9 791 $
“This calculator compares, for informational purposes only, the net amount reaching a shareholder-manager when the same active business income is extracted from a corporation as salary or as a dividend, based on 2026 combined corporate and personal (federal + Quebec) tax rates. The optimal choice depends on many factors not modelled here (investment income inside the corporation, RDTOH/GRIP accounts, insurability, FHSA contributions, personal cash-flow needs, retirement planning, disability protection) and varies from year to year based on your situation. This result does not constitute personalized tax, accounting or business planning advice — consult your tax specialist and accountant.”
Calculation assumptions
- Combined 2026 corporate tax rates: small business (SBD, on the first $500,000 of active income) — 9% federal + 2.2% Quebec = 11.2%; general rate — 15% federal + 11.5% Quebec = 26.5%.
- Income eligible for the SBD, distributed as a dividend, produces a non-eligible dividend (15% gross-up, 12.45% combined credit); income at the general rate produces an eligible dividend (38% gross-up, 26.72% combined credit) — RDTOH/GRIP accounts and investment income inside the corporation are not modelled.
- The amount entered is treated as the gross salary paid (salary route) or as active business income before corporate tax (dividend route); the employer share of QPP contributions is calculated separately and does not reduce the amount, as a simplification.
- QPP 2026 contributions: basic exemption $3,500, combined rate (employer + employee) of 12.6% up to the maximum pensionable earnings ($74,600), then 8% up to the additional maximum ($85,000).
- RRSP contribution room generated by salary equals 18% of gross salary, capped at the 2026 annual maximum of $33,810; a dividend generates no RRSP room and no QPP retirement pension.
- Quebec residents receive a 16.5% federal abatement, applied to federal tax before adding Quebec provincial tax.
- No non-refundable tax credit (other than the dividend tax credit), EI or QPIP contribution, or accounting/legal fee is taken into account.
- This result does not constitute personalized tax, accounting, or business planning advice.
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