Mew + Company Chartered Professional Accountants

Salary or Dividend: Corporate Business Accountants Examine Shareholder Renumeration in 2021

Shifting tax rules and rates pertaining to dividends received from a CCPC make a detailed analysis based on current rates worth revisiting.


Vancouver, BC -- (ReleaseWire) -- 11/15/2021 --A few years back, receiving dividends from a CCPC as opposed to getting a management salary was the more favoured remuneration method. At that time, the corporate tax rate was higher but the corporation paid this tax and bore the full burden of the cash outflow. All that's changed, which is why the Mew & Company Chartered Professional Accountants in Vancouver have published an article on shareholder remuneration. For more, go to

When personal tax rates on CCPC dividends were favourable and with no CPP withholdings on dividends, the after-tax take-home pay of a dividend from CCPC was superior to management salary.

Fast forward six years—and that no longer seems to be the case. Why? In BC, the combined corporate tax rate for a CCPC has decreased to 11 percent and 27 percent for taxable income above the small business deduction limit of $ 500,000.

However, a very complex set of rules to limit the amount of investment income earned by a CCPC was implemented in 2018. These complex rules, in conjunction with higher personal tax rates applied to CCPC dividends, have combined to revisit the better remuneration debate.

What About Management Salary?
Management salary, unlike dividends, is a deductible expense in the calculation of taxable corporate income. Hence, by choosing the management salary method, the corporation lowers its corporate taxes. However, CPP premiums are applied on management salary, maxing out at $ 3,167 for the employer and $ 3,167 for the employee for the 2021 calendar year. Hence, there is an added payroll tax cost of $ 6,334 combined on choosing the management salary. (Note: CPP is a long-term investment vehicle for the employee where there will be an annuity for the contributor starting at age 65.) However, at the personal tax level, taxes on salary have not increased as much as taxes on CCPC dividends – the first advantage.

The second advantage is that salary produces RRSP contribution room whereas CCPC dividend does not. The taxpayer receiving management salary can buy RRSP to reduce personal taxes – an option not available for the CCPC dividend recipient. As most taxpayers are aware, RRSP is a great vehicle for tax shelter.

RRSP Contributions
An investment advisor recently informed me that RRSP contributions have decreased dramatically in recent years. A reason for this may be that capital gains earned outside of an RRSP are only 50 percent taxable whereas draws from an RRSP are 100 percent taxable. This advice was given by accountants in assisting clients to choose between investing using a TFSA, a holding company, an RRSP, or personally. However, with all the whispers of the capital gains inclusion rate going back up to 66.66 or even 75 percent, RRSPs will become very relevant again.

In addition, with the complex rules implemented during 2018 on adjusted aggregate investment income earned by a CCPC, paying a salary to the shareholder/manager is a method the CCPC may have to use to avoid the 27 percent corporate tax bracket.

For those taxpayers remunerated with dividends from a corporation, this is the time to rethink if the strategy is still optimal.

Mew & Company, Chartered Professional Accountants in Vancouver, specializes in helping business owners to save time and money. For corporate tax planning services or any related questions, please contact Lilly Woo, CPA at 604 688 9198 or use the contact form.

About Mew + Company
Mew + Company, Vancouver, is an ideal solution to the taxation problem. With a simple philosophy of building long-lasting customer relationships, the company has been serving corporate clients in a variety of fields—including restaurants, real estate, retail, and the service industry. Investing in their specialist services will undoubtedly be fruitful for all kinds of clients.

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Lilly Woo, CPA, CA, CFE, CFP
Mew + Company Chartered Professional Accountants
604 688 9198
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