How to Pay Yourself a Salary as a Self-Incorporated Canadian

When you incorporate your business in Canada, you gain a choice that sole proprietors don't have: how to take money out of your corporation. The two main options are salary and dividends — and most accountants recommend a mix of both.

This guide focuses on the salary side: what it involves, why you'd choose it, and how to set it up properly.

Why pay yourself a salary?

The biggest reason is RRSP contribution room. Salary income (T4 employment income) is earned income under CRA's definition, which means 18% of it goes toward your RRSP room for the following year. Dividends don't generate RRSP room.

If you're planning to max out your RRSP over your career, you generally need to pay yourself at least some salary each year to keep generating that room.

The second reason is CPP. If you pay yourself a salary, you contribute to the Canada Pension Plan — both as an employee and as an employer (your corporation pays the employer portion). That builds your CPP entitlement for retirement. If you take only dividends, you get no CPP.

What CRA requires when you pay a salary

When your corporation pays you a salary, it must:

1. Withhold CPP contributions, EI premiums, and federal income tax from each paycheque 2. Remit those deductions to CRA by the 15th of the following month (for new employers with less than $25,000/year in average monthly withholdings) 3. Issue you a T4 slip by the last day of February for the previous tax year 4. File a T4 Summary with CRA at the same time

You are both the employer (the corporation) and the employee (you personally). This is normal for one-person corporations — CRA expects it.

Setting your salary amount

There's no rule that says your salary must be market rate. Many incorporated Canadians pay themselves a modest salary (often $50,000–$80,000) to generate RRSP room and CPP, then take any additional income as dividends which are taxed more favourably at the corporate level first.

Your accountant can model the optimal split for your province and income level. The right number depends on your marginal tax rate, provincial tax credits, and RRSP goals.

The payroll process each pay period

Each time you pay yourself a salary, you need a paystub that shows:

• Your corporation's name and address
• Your name as the employee
• The pay period dates
• Gross pay
• CPP deduction (employee portion — 5.95% in 2026)
• EI premium (1.64% in 2026)
• Federal income tax withheld
• Net pay

Tools like PaystubHero calculate these deductions automatically based on your pay frequency and gross amount. You enter the numbers, it applies the 2026 CRA rates, and you get a print-ready PDF in one click.

Quarterly remittances

New employers (less than $25,000/month in withholdings, which covers virtually all one-person corporations) remit to CRA by the 15th of the month following each pay period. So if you pay yourself on January 31, your remittance is due February 15.

Remittances cover: employee CPP + employer CPP + employee EI + employer EI + federal income tax withheld. The employer portions (CPP and EI) come from the corporation, not from your paycheque.

T4 at year end

By the last day of February, you must issue yourself a T4 slip showing your total employment income (Box 14), CPP deducted (Box 16), EI deducted (Box 18), and income tax deducted (Box 22). File the T4 Summary with CRA online through the Business Payroll service.

Your paystubs from each pay period are the source of truth for the T4 numbers — which is why accurate, properly formatted paystubs matter.

Key takeaway

Paying yourself a salary from your corporation involves more administration than taking dividends, but it builds RRSP room, CPP entitlement, and a clean employment record. Keep good paystub records for every pay period. They make T4 preparation straightforward and protect you if CRA ever asks questions.

Not tax advice — consult your accountant for the optimal salary/dividend mix for your situation.