Salary vs Dividend Planning Services for Toronto & GTA Business Owners
Most small business owners incorporate just following what was done by their accountants the previous year without truly knowing how it is done. Beta Taxes Professional Corporation offers Salary vs. Dividend Planning, tailored to your unique situation including income, your retirement plans, and your cash flow requirements, rather than a general solution that was successful in another case.
- Comparison model for salary, dividend or both
- RRSP and CPP considerations included in the analysis
- Integration of corporate and individual taxation
- An annual review of your plan, not just a one-time solution
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Affordable Salary vs Dividend Planning Services in Ontario
The choice between salary versus dividends for Canadian business owners is not a matter of right and wrong – only one correct answer. Salary increases your RRSP room and CPP eligibility. It is seen as stable income when applying for a mortgage. While dividends do not require CPP payments and payroll management, there are certain rules about corporate resolutions and T5 slip.
Beta Taxes provides fixed-fee compensation solutions for Canadian owner-managers in Toronto and the GTA region, calculating a true blend based on your particular financial situation, not simply listing pros and cons you can easily find in various sources on the web.
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Why Owner-Manager Compensation Planning Requires Modelling, Not a Rule of Thumb
Owner-Manager Compensation Planning is important because Canadian taxation policy strives toward “integration”, in which salaries and dividends are meant to have roughly the same tax burden. In reality, however, this is where the disparities exist: salary alone is eligible for CPP payments, only the salary provides RRSP room, and your particular province, earnings, and plans regarding retirement will make one choice cheaper than the other.
This is precisely the reason why an effective Tax-Efficient Compensation Strategy needs to be modelled based on your specifics and not just implemented as a 50/50 compromise or “the easiest way possible”. In this respect, a 32-year-old consultant and a 55-year-old professional who intends to sell their practice in five years can quite sensibly reach different conclusions despite having similar income from the corporation.
Salary Versus Dividend Planning
Compensation Modelling
- Side-by-side analysis of salary, pure dividend, and hybrid alternatives
- Combined corporate and personal tax calculation for each option
- Modelling will be done with reference to your real income and corporate profits
- The clear choice and not just a spreadsheet with the options
RRSP & Retirement Effect Evaluation
- Evaluation of the amount of salary required to maximise RRSP contribution room
- Retirement saving effect of choosing the dividend option
- Advice on replacing CPP contributions from other savings plans if dividends are chosen
- Integration with your retirement planning objectives
CPP & Payroll Issues
- Calculation of the cost of CPP contribution at varying salary levels
- Payroll process advice if salary is chosen as the form of payment
- Understanding of what dividends do for your future CPP entitlement
- A clear picture of the trade-off, not just the immediate tax savings
Dividend Tax Planning
- Advice on which dividends are considered eligible and non-eligible
- Proper authorisation from the corporation for declaring dividends and documentation
- T5 preparation and filing assistance
- Coordination of your T5s in relation to your corporation’s RDTOH/GRIP balances
TOSI & Family Compensation Review
- Advice on Tax on Split Income rules if you pay dividends to family members
- Review of your family member involvement for legitimate dividend sprinkling
- Documentation for surviving CRA audits
- Prevention of typical errors that result in reassessments
Annual Compensation Review
- Annual reassessment if your financial situation, goals, or tax legislation change
- Adaptations of your compensation strategy due to changes in situations
- Coordination of your annual tax planning process in general
- Flexibility of your business, rather than having the same strategy all the time
Why Choose Beta Taxes for Salary vs. Dividend Planning?
Discovery
We know your income requirements, retirement plans, and your level of comfort with administration.
Evaluation
We review your business finances, individual taxation situation, and past compensation strategy, if any.
Strategy Session
We compare scenarios of salaries, dividends, and mixed strategies and show you the actual tax effect of each one.
Ongoing Support
We assist you in implementing the strategy and reviewing it yearly as your situation changes
Serving Salary vs. Dividend Planning Across Ontario & Canada
No matter where your business is located, our remote-based process for Salary vs. Dividend Planning ensures that you have the same structured and CPA reviewed process whether you are a growing start-up, a multi-branch company or even an organisation expanding beyond Ontario.
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testimonials
Our Clients' Results Speak for Themselves
Real success stories from businesses we’ve helped grow.
We Work with Your Preferred Accounting Software 2
I’m a realtor in Canada, and working with Beta Taxes CPA Canada has been a great experience. They have a strong understanding of real estate–specific tax matters, including commissions, expenses, GST/HST implications, and long-term tax planning. Anmol and the team are extremely professional, responsive, and detail-oriented. They not only advised on my tax filing on time, but also provided valuable consultancy to help optimize my tax position and stay compliant. They explain things clearly and genuinely look out for their clients’ best interests.
Milan Bangia
We Work with Your Preferred Accounting Software
I’m a realtor in Canada, and working with Beta Taxes CPA Canada has been a great experience. They have a strong understanding of real estate–specific tax matters, including commissions, expenses, GST/HST implications, and long-term tax planning. Anmol and the team are extremely professional, responsive, and detail-oriented. They not only advised on my tax filing on time, but also provided valuable consultancy to help optimize my tax position and stay compliant. They explain things clearly and genuinely look out for their clients’ best interests.
Milan Bangia
FAQ’s
Frequently Asked Questions
Should I compensate myself by salary, dividends, or both?
That depends on your income level, planning horizon, financing needs, and appetite for administrative burden. It is highly likely that you would benefit from a combination of both methods; however, each person will have their unique combination depending on numbers.
Is there any tax consequence difference if I compensate myself with dividends vs. salary?
The Canadian tax system attempts to integrate corporation and individual tax rates, making it look like the net outcome will be the same regardless of method chosen. However, in reality, the outcome will differ based on CPP contributions, RRSP contribution room, and your personal tax rate.
Are dividends exempt from CPP?
Yes — dividends are exempt from CPP contributions. It could make dividends quite attractive compared to salary; however, the price to pay is the inability to build your CPP pension and lack of RRSP contribution room.
Could I distribute dividends to my spouse or other family members to reduce taxes?
Yes. It is a requirement to file US tax returns as a US citizen or green card holder regardless of where you reside, along with the Canadian filing requirements.
How much will it cost to prepare a salary/dividend compensation plan?
The costs of preparation depend on the level of complication of your situation as well as on whether you need a single or an annual assessment. We provide you with a flat fee after evaluating your financial position.
Will paying myself dividends rather than salary have an impact on getting a mortgage?
Potentially — lenders tend to consider salary a much more dependable source of income which could make borrowing simpler.
How much salary would I need to generate the maximum RRSP contribution room?
The RRSP room equals 18% of prior year earned income limited by the annual ceiling. We determine the exact salary necessary to reach your desired RRSP room in our calculations.
Could the compensation policy change each year?
Definitely. The income level, company’s profitability and other circumstances may vary throughout the years and this is why we suggest reviewing the policy on an annual basis.
Could there be a problem with CRA if my salary seems unreasonable?
Yes. CRA could challenge the salary that does not correspond to the actual work done, especially when it is high without any business reason. Our approach is aimed at designing an appropriate and reasonable compensation plan.
Is there documentation required to receive dividends?
Yes – to receive dividends, you will need to document the payment by a board resolution and report it by issuing a T5 slip.
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Your Dedicated Accounting Partner Is Just a Call Away
Each business has its own unique financial goals and the best accounting strategy is based on understanding the goals. If you’re in need of continuous support in accounting including bookkeeping, tax planning and payroll management, or business consulting services Our team is ready to assist.
In your initial call we’ll use the opportunity to understand your business as well as discuss the current challenges you face in accounting and suggest solutions that are tailored to your specific needs. You’ll get a better picture of how we will assist you in achieving financial success by providing clear communication, practical guidance and consistent, year-round service.
- Talk about your accounting and tax requirements
- Receive personalised recommendations based on your company's goals
- Find out more about our accounting process and service options
- What’s your budget?
