Rates verified Oct 2026 · Sources: CRA, Service Canada
ExampleBusiness income $150,000 · Personal expenses $80,000 · Ontario
Annual tax saving · Ontario · CCPC
Corp take-home
$78,452
after corp + dividend tax
Sole prop tax
$41,626
27.8% effective
Retained in corp
$131,700
tax-deferred
SBD rate
12.2%
combined ON
Simplified comparison using 2026 SBD rates and non-eligible dividend tax integration (SBD income is paid out as non-eligible dividends). Does not account for CPP contributions, salary vs dividend mix optimization, or complex tax planning. CCPC SBD applies to first $500,000 of active business income. LCGE $1,275,000 for qualifying shares. Source: canada.ca. Consult a CPA. Not financial advice.
Business income of $150,000 in Ontario, with $80,000 paid out to live on. These figures are income tax only. A sole proprietor also pays both halves of CPP, which this comparison does not include. Dividend tax uses the small-business (non-eligible) gross-up.
| Path | Tax | Cash you can spend | Left in the company |
|---|---|---|---|
| Sole proprietor | $41,626 | $108,374 | $0 |
| Corporation, then a dividend | $19,848 | $78,452 | $51,700 |
Corporate tax on the full $150,000 is $18,300. Tax on the $80,000 dividend is $1,548. Income-tax difference versus staying a sole proprietor: $21,778.
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Incorporating in Canada unlocks the small business deduction (9% federal + 0–3.2% provincial on the first $500k of active business income) but adds $2,000–$5,000/year in compliance costs. This calculator finds the income breakeven where incorporation saves you money net of those costs - usually around $100,000–$150,000 depending on province and how much you actually need to spend personally.
The tool computes total tax (corporate + personal) for a sole proprietor at your income vs a CCPC paying enough salary or dividend to net the same amount to you. Retained corporate earnings are taxed at the small business rate (typically 11–13% combined). Integration (the principle that personal + corporate tax should equal sole-prop tax) isn't perfect, creating a small 'cost' or 'benefit' depending on province.
In Ontario, the combined small business corporate tax rate is 12.2%. An Ontario sole prop earning $150k net pays roughly $45,000 in personal tax; an incorporated version drawing a $60k salary + $50k dividend + leaving $40k retained pays about $38,000 combined - a ~$7,000 saving, partially offset by $3,000 in accountant/legal fees.
The breakeven varies by province, but most accountants cite $100,000–$150,000 in business income as a starting range where corporate tax deferral (small business rate ~9% vs personal rate of 40%+) begins to outweigh incorporation costs. The calculator shows your specific breakeven based on province and income.
The SBD reduces the federal corporate tax rate to 9% on the first $500,000 of active business income for Canadian-Controlled Private Corporations (CCPCs). Combined with provincial small business rates, the total rate is typically 10–13% depending on province-significantly below personal marginal rates at higher incomes.
Costs include annual accounting fees ($1,500–$4,000+), provincial registration, potential need for a separate business bank account, and more complex tax filing. Income left in the corporation cannot be spent personally without triggering additional tax. Incorporation is most beneficial when you can leave surplus in the company.
Long-form explainers that pair with this calculator.