Salary vs Dividends ⚖️ - Which Creates More Tax? 💸

so the ultimate question that we get is which one is going to make me pay less taxed and this is a challenging question to answer because there's really minimal Savings in tax on either side okay so there's minimal tax savings between paying yourself a salary and paying yourself dividends and this is by Design now I'm going to get a little bit nerdy on you but the Canadian tax system is a beautiful thing it's based on a concept called integration this has already been contemplated in the Canadian tax system what they're looking for is that someone getting paid a salary an employee of a company and an owner of a company should pay the same amount of tax on the company's side the dividend payment it's taxed a little bit at the corporate level and then the rest is taxed at the personal level and overall you pay about the same amount of tax now there's small differences by province by province and year by year based on tax rates and there are minimal savings to be had on one side of the other but typically aren't enough for us to really go down that path

Channel: Avalon Accounting

Views: 1,942

Keywords: Small Business Accounting, Small Business Bookkeeping, Small Business, Canadian Small Businesses, Online Accountant, Online Bookkeeper, Business Advice, Accounting Advice, Corporate Tax, Business Taxation, Tax Tips, Canadian Tax Tips, Build a Business

Id: jQZeRoE7dKs

Length: 1min 0sec (60 seconds)

Published: Wed Apr 12 2023