Salary or dividends, on the way to retiring?

Paying yourself from your own corporation is a choice the one-year calculators answer badly. Salary costs CPP contributions today and buys a bigger CPP and RRSP room later. Dividends save the contributions but leave more taxed inside the corporation. Which wins depends on the whole retirement that follows.

This runs your working years and retirement to 95 both ways, with 2026 federal and provincial tax, your province's small-business rate, CPP, OAS and its clawback, and the corporation's savings wound down as dividends once you stop.

Province

Your ageyr

Years of work leftincluding this one

Business revenue a year$what the corporation earns

What it pays you a year$before personal tax

Saved in the corporation$

RRSP$

TFSA$

Spending a year in retirement$after tax

It pays you today in

CPP at 65, a year$Service Canada's estimate

What this leaves out. It's a rough model, for comparing the two. Every dividend is non-eligible; eligible dividends, GRIP, RDTOH and the capital dividend account aren't modelled, nor is the passive-income grind on the small-business limit. CPP is rebuilt from your Service Canada estimate and the years each way pays salary, with CPP's drop-out of your lowest years — a close approximation of the real formula, not your own contribution record.

For your own CPP, a partner and a pension, build your full plan, free.

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