How Do I Get Money Out of My Corporation Without the Tax Killing Me?

Money leaves a Canadian corporation in a handful of ways: salary, dividends, repayment of money you lent the company, capital dividends, contributions to a pension plan such as an IPP, and eventually a sale, a wind-up or your estate. Salary and regular dividends are taxed in your hands; repaying a shareholder loan and paying a capital dividend generally are not. There's no route that takes it all out with no tax, so the planning is about the mix and the timing, year by year.

“If I take any extra money out, it’s going to kill me”

That feeling is usually right about one year and wrong about the whole picture. Personal tax is progressive: each extra dollar you take in a year is taxed at your highest rate for that year. A big draw on top of an already high income lands in the top bracket. The same amount spread over several years, or taken in years when your other income is lower, can cost noticeably less.

Profit left inside the corporation was taxed at the lower corporate rate. The rest of the tax is deferred, not avoided. It comes due when the money reaches you or your family. Canada's system is built so the total tax, corporate plus personal, ends up roughly the same whichever way the money comes out. The differences sit in the details: your province, which kind of dividend, which year, and who receives it.

The ways out

Route	How it's taxed	Useful when	Watch out for
Salary	Deductible to the corporation; taxed at your regular personal rates	You want RRSP room (18% of earned income, up to $33,810 for 2026), CPP, or income a lender will recognise	You pay both halves of CPP; payroll remittances
Dividends	Paid from after-tax profit; taxed at a lower personal rate because of the dividend tax credit	You want flexible draws without payroll	No RRSP room or CPP; paying family members is limited by the TOSI rules
Repaying a shareholder loan	Money you put into the company and recorded as a loan can be paid back to you without personal tax	You funded the company personally, or left earlier pay owing to you	It has to be on the books as a loan from you. The reverse, the company lending to you, has strict rules
Capital dividend	Paid from the capital dividend account without personal tax, once the election is filed	The corporation has realised capital gains, or received life insurance proceeds	The election must be filed before the dividend is paid; over-paying is penalised
Individual Pension Plan	Corporate contributions are deductible; growth is tax-deferred until you draw a pension	You're roughly 45 or older with years of T4 salary	Actuarial costs and filings; needs salary history
Sale or wind-up	A capital gain on your shares; the Lifetime Capital Gains Exemption may shelter roughly $1.25 million of gain on qualifying shares	You're selling to a buyer or family	The shares must qualify, and that takes years of preparation

Corporate-owned life insurance isn't a way to take money out today. It's a way to move money out later: at death, the death benefit less the policy's cost basis is credited to the capital dividend account and can flow to your family tax-free. Some owners also borrow from a bank against a policy's cash value in retirement. See corporate-owned life insurance and accessing policy cash value.

The order often matters most

Your accountant will set the right sequence for you. A common way to think about it:

• Routes with no personal tax first. If the company owes you money (a shareholder loan) or has a positive capital dividend account balance, those can usually come out before anything taxable.
• Salary to a purpose. Enough salary for what salary buys you: RRSP room, CPP, or a mortgage application.
• Dividends for the rest of what you need this year, sized so you don't spill into a higher bracket than necessary.
• Leave the true surplus in, and give it a job: an investment plan, a pension, or insurance that moves it out later. See what to do with money sitting in your corporation.

What we check first

The phrase owners use most on our calls is “pull it out,” and the question is usually how to maximise what they can take out every year. One owner put it this way: the tax in the corporation is low, but then you still need to get the money out.

Greg's view from those calls is that there has to be a floor first: a settled split between salary and dividends, worked out with your accountant. When an owner hasn't settled how they pay themselves yet, his advice is to sort that out with the accountant before anything else, because there's very little we can do on the planning side until it's done.

Who this is for, and who it isn't

Run your own numbers

Questions to ask your accountant

• Does the company owe me any money (a shareholder loan balance)?
• What is our capital dividend account balance today?
• What's the cheapest mix of salary and dividends for what I need this year, in my province?
• If I need more next year, should I take some of it this year instead?
• What would it cost to take out an extra $50,000 this year versus spreading it over three years?

Related guides

Frequently asked questions

Can I take money out of my corporation without paying tax?

Some money can come out without personal tax: repayment of a loan you made to the company, and capital dividends paid from the capital dividend account. Regular salary and dividends are taxable. Planning reduces the total over time; it doesn't take the tax to zero.

What is the cheapest way to pay myself from my corporation?

It depends on your province, how much you need, and whether you want RRSP room, CPP or income a lender will recognise. Many owners use some salary plus dividends, and use routes that carry no personal tax, such as shareholder loan repayments, first. Your accountant should run the numbers each year.

Can my corporation lend me money instead of paying me?

Usually only briefly. A loan from your corporation to you generally has to be repaid within a set period after the company's year-end, or it's added to your income. Talk to your accountant before taking money this way.

How is Dundas Wealth paid?

Dundas Wealth is an insurance brokerage (Dundas Life Inc., FSRA #37628M). The strategy session is free. If a life insurance policy is part of your plan and you decide to go ahead, the insurance carrier pays us a commission when the policy is placed. You don't pay us a fee, and if your structure is already right, your one-page brief will say so.

Figures are current as of 2026 and are general information, not tax, legal or investment advice. Rules and rates change, and how they apply depends on your facts. Confirm anything here with your accountant before acting. Dundas Wealth is an insurance brokerage (Dundas Life Inc., FSRA #37628M). We are paid by the insurance carrier if and when a policy is placed.