What is the Saskatchewan small business tax rate?

In Saskatchewan, small businesses pay a combined federal and provincial rate of 10% on the first $500,000 of active business income (9% federal + 1% SK provincial). Income from $500,000 to $600,000 is taxed at 16%, and income over $600,000 is taxed at the general rate of 27%.

Should I pay myself salary or dividends in Saskatchewan?

The salary vs dividend decision depends on your specific situation. Salary provides RRSP contribution room and is tax-deductible for the corporation. Dividends have lower personal tax rates but don't create RRSP room. SK TaxGPT can calculate which option gives you more after-tax income based on your numbers.

What are the corporate tax filing deadlines in Canada?

Corporate tax returns (T2) must be filed within 6 months of your fiscal year-end. Corporate taxes owed are due either 2 months or 3 months after year-end depending on whether you qualify for the small business deduction. The tool helps you calculate your specific deadlines based on your fiscal year.

How do I calculate home office deduction in Canada?

Home office deductions are calculated based on the percentage of your home used for business. You can deduct a proportional amount of utilities, insurance, property taxes, mortgage interest, and maintenance. SK TaxGPT calculates this automatically based on your office square footage and total home size.

What is the dividend tax rate in Canada?

Dividend tax rates in Canada depend on whether dividends are eligible or non-eligible. Eligible dividends are grossed-up by 38% with a 15.02% federal tax credit, resulting in lower effective rates. Non-eligible dividends are grossed-up by 15% with a 9.03% federal tax credit. The actual tax rate also depends on your province and income level.

What is the difference between eligible and non-eligible dividends?

Eligible dividends are paid from corporate income taxed at the general rate (27% in SK). Non-eligible dividends are paid from income taxed at the small business rate (10% in SK). Most small business owners receive non-eligible dividends because their corporation qualifies for the small business deduction.

Should I pay myself salary or dividends?

The salary vs dividend decision depends on your situation. Salary creates RRSP room and CPP benefits but costs more in payroll taxes. Dividends have lower tax rates but don't create RRSP room. Many business owners use a hybrid approach - salary up to the CPP maximum ($81,200 in 2025) and dividends for the rest.

Dividend Tax Rate Canada 2025 | Complete Guide + Calculator

How Dividend Tax Works in Canada

Canada uses a unique system called "integration" designed so you pay roughly the same tax whether you earn income personally or through a corporation. The key mechanism is the gross-up and dividend tax credit.

The Two Types of Dividends

Eligible Dividends

From income taxed at general rate (27% in SK)
Gross-up: 38%
Federal tax credit: 15.02%
Lower effective tax rate
Common for large corporations

Non-Eligible Dividends

From income taxed at small business rate (10% in SK)
Gross-up: 15%
Federal tax credit: 9.03%
Most common for small business owners
Typical for CCPCs

Understanding the Gross-Up

The gross-up mechanism "pretends" you received the full pre-tax corporate income. Then the dividend tax credit gives you back the tax the corporation already paid.

Example: $10,000 Non-Eligible Dividend

Dividend received$10,000

Gross-up (15%)+$1,500

Taxable amount$11,500

Federal tax credit (9.03%)-$1,038

Salary vs Dividends: Complete Comparison

Factor	Salary	Dividends
RRSP Room	Creates room (18% of income)	No room created
CPP Contributions	Required (builds benefits)	Not required (no benefits)
Corporate Deduction	Tax deductible	Paid from after-tax profits
Personal Tax Rate	Full marginal rate	Lower (due to credit)
Administration	Payroll required	Simple (no payroll)
Mortgage Qualification	Banks prefer T4 income	May be discounted

Key 2025 Numbers

Max RRSP Contribution

$32,490

Requires $180,500 salary

Max CPP Pensionable Earnings

$81,200

Max CPP contribution: $8,860

SK Small Business Limit

$600,000

Higher than federal $500K

SK Small Business Rate

10%

9% federal + 1% provincial

Common Strategies

Strategy 1: Maximize RRSP Room

Pay yourself salary of $180,500 to create the maximum RRSP contribution room of $32,490 for 2025. Best if you want to maximize tax-sheltered retirement savings.

Strategy 2: Minimize CPP

Pay only dividends if you don't need CPP benefits. Saves up to $8,860/year in contributions. Best if you have other retirement savings and want maximum flexibility.

Strategy 3: Hybrid Approach (Most Common)

Pay salary up to $81,200 (max CPP pensionable earnings), then take remaining income as dividends. This gets you some RRSP room, CPP benefits, and dividend tax efficiency.

Get Your Personalized Calculation

Our AI calculator can compare salary vs dividends for your specific income level and tell you exactly how much you'll keep after tax.

Calculate Now - Free

When to Choose Salary

You want to maximize RRSP contributions
You're applying for a mortgage
You want to build CPP benefits
You have childcare expenses to claim
Your spouse has lower income (spousal RRSP strategy)

When to Choose Dividends

You have no need for RRSP room
You have alternative retirement savings (TFSA, real estate)
You want to minimize CPP contributions
You want simpler administration
You're income splitting with adult family shareholders

Disclaimer

This is general information only. The salary vs dividend decision is complex and depends on your specific situation. Consult a CPA or tax professional to model your exact scenario.

Sources

CRA T4012 T2 Corporation Income Tax Guide
Saskatchewan Ministry of Finance - Corporate Income Tax
CRA - Dividend Tax Credit Information

Dividend Tax Rate Canada

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