A professional corporation paid all dividends. We modeled the optimal mix, saving about $9,000 a year while building RRSP room.
A professional corporation owner paid herself entirely in dividends, missing RRSP room and CPP. We modeled salary, dividends, and retained earnings against her actual income needs and retirement goals. The optimized mix saved roughly $9,000 a year in combined tax while restoring RRSP contribution room.
Professional practices are taxed on work in progress and face personal services business risk where one client dominates.
Planning has to be in place before the transaction. The salary-versus-dividend mix, the timing of a capital purchase and the choice of year-end all change the outcome, but only prospectively.
Why it bites: Almost every planning opportunity we see missed was available and simply not taken in time; very few are recoverable after year-end.
A CCPC files its T2 within six months of year-end, with the balance due two months after (three where the small business deduction is claimed). The 9% federal small business rate applies to the first $500,000 of active business income.
Why it bites: The filing and payment deadlines differ, and interest runs from the payment date. Filing on time while paying late still costs money.
Every engagement above was priced as a fixed fee agreed before the work started, and paid only once the client had reviewed the result. If any of this looks like your situation, the first step is a free 15-minute call — we will tell you plainly whether there is anything worth doing.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. This case study is based on a real client engagement handled by Tax Filings Canada; the client's name and identifying details have been changed. Outcomes depend on your own facts.
Sources. CRA — Corporations · CRA — Corporation tax rates · Income Tax Act (Justice Laws Website)
