# Corporate taxes vs. personal taxes



## pollaris (Aug 24, 2011)

If you own a corporation, is it better to take profits at the end of the year as dividends or be an employee of the corporation and get paid every month?

It is my understanding that taking money out as dividends would be better (to pay less taxes) but, from a personal income tax standpoint, if I have to pay CPP etc is it not better to be an employee of the company so that one day I get get a pension?

I am not sure if I make myself clear as I know nothing about this matter so...any help is appreciated


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## Homerhomer (Oct 18, 2010)

It depends on personal situation, quite often it is advised to pay combination of salary (to create CPP, RRSP room, have earned income for loan application, claim child care and so on) and dividends.

Dividends may save you some tax in some situations, but generally speaking the tax on wages and dividends if you own the corporation is very similar, remember that paying wages reduces your profit and hence your corporate tax is smaller, dividends on the other hand do not.

Speak to your accountant ;-)


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## CanadianCapitalist (Mar 31, 2009)

I think this topic has been discussed before, so try running a search.

Here is a discussion paper on this topic from Jamie Golombek:

https://www.cibc.com/ca/pdf/jg-rethinking-rrsps-en.pdf


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## sprocket1200 (Aug 21, 2009)

you will have more flexibility on timing and amounts if you go the dividend route. as well, if you have partners, it is more flexible for all involved.


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## neznaika (Sep 21, 2011)

*I own condo and have 2 businesses in the same address*

I have a question; please help me because I don’t know what ways the best is.
I am employee and I bought condo in the April this year. I am paying my mortgage every two weeks $ 482. Last month I opened two businesses and did register on my address condo. Now I need doing agreement for rent between my business and me but I don’t know how much I need to put cost in the agreement of rent because if I make like 50% for cost mortgage I will have more income like employee but for my businesses it is okay, If I don’t put any cost how will be win for tax return me and my two businesses?
Thank you.


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