If I'm the only owner and employee of corporation, and if I pay myself the entire corporation's revenue, do I have to pay federal/provincial corporation tax on my salary?


so say I own a corporation and I am the only owner and employee of that corporation. if the corporation earned $40000, and if I pay myself the entire $40000 for my salary, (leaving the corporation $0... I can do this since I am the only employee of the corporation), is it true that I do not have to pay neither of federal and provincial corporate tax on the $40000 that the corporation made, but only pay T4 income tax on the $40000 (since it is my salary)? Thank you,


1 person found this helpful

Well, you have just made the biggest mistake in the Tax Act and thus shot yourself in the foot with your own weapon.

The corporation only suffers tax @ 13% on active income, which one assumes you have earned, leaving 87% after tax.

The human suffers tax at 25% minimum once he becomes a tax payee, leaving only 75% after tax.

The corporation can thus make more purchases with the difference.

Was this answer helpful? Yes No
1 additional answer

No answers have been posted

More Actions

People come to ProFile for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach: