Is salary or dividends better for an Alberta incorporated business owner?

It depends on your personal income needs and corporate income level. Salary creates RRSP room, covers CPP, and is a deductible corporate expense. Dividends avoid CPP employer costs but generate no RRSP room and Alberta has no provincial dividend tax credit for non-eligible dividends. The optimal mix varies — consult an accountant.

What is the corporate tax rate for a Canadian CCPC in 2025?

Alberta CCPCs pay a combined federal + provincial rate of 11% on the first $500,000 of active business income (small business deduction). Above $500,000, the general rate is 23% combined (15% federal + 8% Alberta).

Do dividends avoid CPP contributions?

Yes. Dividends paid from a corporation are not subject to CPP contributions. However, this means no CPP benefits accumulate. For salary, both employee (5.95%) and employer (5.95%) CPP contributions are required — these are a real cost that reduces the salary advantage.

🇨🇦 Free Tool · 2025 Alberta CCPC Rates

Salary vs Dividend Calculator

Compare the total tax cost of paying yourself salary versus dividends from your Alberta incorporated business. See net take-home, CPP impact, and which option saves more in 2025.

✓ 2025 Alberta CCPC Rates ✓ CPP Included ✓ Side-by-Side Comparison ✓ Free · No Sign-up

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Uses 2025 Alberta combined federal + provincial tax rates. Assumes CCPC with small business income under $500K. CPP at 2025 rates. For planning purposes — consult your accountant before making changes.

Corporate Net Income Before Owner Compensation ($) Before paying yourself

Desired Personal Income ($) How much you want to take out

Lower Total Tax

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A — Salary

B — Dividend

Salary vs Dividends: What's the Difference?

As an Alberta CCPC owner, you can pay yourself a salary (deductible to the corporation) or dividends (paid from after-tax corporate earnings). Each method has distinct tax and cash flow implications.

Salary Advantages

Deductible to the corporation — reduces corporate tax
Creates RRSP contribution room (18% of earned income)
CPP contributions build future retirement benefits
Establishes "earned income" for certain tax credits

Dividend Advantages

No CPP employer contribution required (saves up to $4,034)
No payroll administration or T4 filing for dividends
Can be split among family shareholders (with planning)
No source deductions to remit to CRA during the year

2025 Alberta CCPC Rates Used

Small business corporate rate: 11% (federal 9% + Alberta 2%)
General corporate rate: 23% (above $500K)
CPP 2025: 5.95% employee + 5.95% employer on $3,500–$71,300
Non-eligible dividend gross-up: 15%; Federal DTC: 9.03%
Alberta: no provincial dividend tax credit for non-eligible dividends

Important Considerations

This calculator uses simplified assumptions. The optimal mix depends on your full financial picture, including RRSP room, CPP entitlement, eligible vs non-eligible dividends, and your corporate income level. A Swift Accounting advisor can model the exact numbers for your situation.

Salary vs Dividend Calculator

Salary vs Dividends: What's the Difference?

Salary Advantages

Dividend Advantages

2025 Alberta CCPC Rates Used

Important Considerations

Get the Right Salary/Dividend Mix