Salary versus dividends, in plain English

Integration means the combined corporate and personal tax on a dollar is broadly similar whichever route you take. So the interesting differences are elsewhere.

Salary creates RRSP contribution room and CPP entitlement, requires payroll remittances, and is a deductible expense to the company. Dividends skip payroll, create no RRSP room and no CPP, and come out of after-tax corporate income.

A mixed approach is common: enough salary to generate RRSP room and smooth household cash flow, with dividends layered on top. The right mix changes with your income, your province and what the corporation needs to retain.