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Paying yourself a salary from your corporation: how it works

Deciding to take a salary is one question; running it correctly is another. Moving money from the corporate bank account to your own is not salary unless it goes through payroll, with deductions calculated, remitted and reported. This article covers the mechanics for an owner-manager in Ontario: registering, the first pay, what comes off, who pays what, when remittances are due and what the CRA can assess. The choice between salary and dividends is covered in the separate guide linked below.

Sora Accounting & Tax · General information · Editorial policy
Updated · 6 min read

From corporate account to owner’s salary

Four steps for paying an owner a salary: open a payroll account, deduct CPP, EI where it applies and tax, remit on schedule, then report on a T4.

Visual labels: Register payroll account; Deduct on each pay; Remit by due date; File T4 by February.

See the sourced 2026 Ontario tax guide: rates, limits and deadlines →

What to take away

  • Salary needs a payroll account, deductions on each pay and a T4 at year-end; a transfer to yourself is not salary.
  • As both employee and employer you carry both halves of CPP; EI usually does not apply if you control more than 40% of the voting shares.
  • Deductions you take belong to the CRA from the day you take them, and directors can be personally liable if they are not remitted.

Salary is payroll, not a transfer

When you are paid as an employee of your own corporation, the corporation becomes an employer in the CRA’s eyes. It deducts CPP contributions, EI premiums where they apply and income tax from each payment, adds its own share of CPP, and remits all of it. Taking cash out without those steps is a different transaction, such as a shareholder loan or a dividend, and each has its own consequences.

If you have been paying yourself by e-transfer and sorting it out later, the shareholder-loan article explains why that can create a tax problem at year-end. The salary-vs-dividends guide covers whether salary is the right choice for you; this article assumes you have decided and want to do it properly.

Set up before the first pay

A corporation that pays salary needs a payroll program account under its business number. The CRA says to register before your first remittance due date, which is generally the 15th of the month after the month you began withholding. If you pay on March 25, for example, the first remittance is generally due April 15. Registering is done through the CRA’s business services; Sora’s setting-up-CRA-accounts article covers the wider set of accounts.

You also need your own social insurance number on file and a completed Form TD1, Personal Tax Credits Return. The CRA expects the employer to collect a TD1 when someone starts work, and a new one within seven days of a change that could affect the person’s credits. If you claim more than the basic personal amount, a provincial form is needed as well. Keep the signed forms with the payroll records.

What comes off each pay

CPP contributions are deducted from pensionable earnings if you are in pensionable employment, are not considered disabled under the CPP and are between 18 and 69. For 2026 the employee rate is 5.95% on earnings between the $3,500 basic exemption and the $74,600 ceiling, to a maximum of $4,230.45. The second additional contribution is 4% on earnings from $74,600 to $85,000, to a maximum of $416. The corporation must contribute an equal amount.

Income tax is withheld using the CRA’s payroll deduction tables or calculator, based on your TD1. EI is different for many owners. The CRA notes that employment is not insurable when the employee controls more than 40% of the voting shares of the corporate employer. Employment can also be non-insurable when the employer and employee are related and not dealing at arm’s length. If neither exclusion applies, EI is deducted: for 2026 the employee rate is 1.63% on up to $68,900 of insurable earnings, with a maximum of $1,123.07 and an employer amount of 1.4 times that. Confirm your own ownership position, including related shareholders, with your accountant.

A worked example with round numbers

Illustrative example: suppose you pay yourself a salary of $60,000 for 2026, evenly through the year, and you control the corporation. CPP is calculated on $60,000 less the $3,500 exemption, which is $56,500, at 5.95%. That is $3,361.75 deducted from you and a matching $3,361.75 contributed by the corporation, for $6,723.50 sent to the CRA for CPP alone. Income tax withholding depends on your TD1 and is additional.

The point is not the exact figures, which assume a full year and no other jobs. It is that the corporation’s cost of paying $60,000 is higher than $60,000, and your take-home is lower. Both numbers should be in your cash forecast before you set the amount, along with the personal tax you may owe or recover when you file.

Remitting on time

The CRA assigns a remitter type, generally based on your average monthly withholding amount from two calendar years ago. New employers are treated as regular remitters, who pay monthly by the 15th of the following month. A new small employer can qualify to remit quarterly for its first year, but only if its monthly withholding is under $1,000 and it has a perfect compliance history; quarterly due dates are April 15, July 15, October 15 and January 15. Once both CPP halves and income tax are counted, even a modest owner salary can push monthly withholding past that $1,000 mark. Larger employers remit more often. Check your assigned type in your CRA account rather than assuming it.

When a due date lands on a weekend or a CRA-recognized holiday, the payment counts as on time if it is received or processed at a financial institution by the next business day. Paying earlier than required is accepted and does not change your remitter type. Treat the deductions as money held for the CRA: moving them into the operating account for a few weeks is how a small timing problem becomes a penalty.

Salary and your personal planning

Salary is also what ties into several personal calculations. RRSP deduction room, for example, is generally 18% of the previous year’s earned income up to the annual limit, which is $33,810 for 2026, less any pension adjustment. CPP contributions build entitlement to future CPP benefits, which some owners value and others weigh against the cost. A lender may also ask for T4 slips as proof of income.

None of that makes salary the right answer for everyone. The right amount depends on the corporation’s profit, your other income and your retirement plans. Many owners revisit it each year before the corporation’s year-end, which also matters if you are thinking about a bonus; see the article on paying bonuses before year-end.

Year-end reporting

The corporation reports your pay on a T4 slip with a T4 Summary, filed by the last day of February after the calendar year. For 2026 income, that falls on March 1, 2027, because February 28 is a Sunday. Reconcile the T4 totals to payroll records and remittances before filing, since a mismatch is easy to avoid and tedious to correct.

Salary is reported in the year it is paid, which can differ from the corporation’s fiscal year. Keep payroll registers, TD1s, remittance confirmations and the year-end summary together. The T4 article covers filing mechanics and penalties in more detail.

What happens when deductions are missed

If the corporation does not deduct the CPP and EI it was required to, it is responsible for them even if it cannot recover them from you, and can be assessed for both the employer and employee shares plus penalty and interest. A penalty of 10% of amounts not deducted may apply, rising to 20% for repeat knowing or grossly negligent failures in the same year.

Late remittances carry graduated penalties that rise with the number of days late, plus interest compounded daily; the late payroll remittance penalties article covers the rates. The directors of a corporation are jointly liable with it for unremitted deductions unless they act to make sure the amounts are remitted. In an owner-managed company, that director is you.

What to bring to your accountant

Bring the corporation’s business number and any payroll account details, your ownership percentages and any related shareholders, the amount you want to take home each month, your age and CPP history, and recent corporate cash flow and year-end projections.

With those, an accountant can help you choose a pay frequency, set up payroll, estimate the cost to the corporation and plan the year-end. Sora’s payroll service covers setup, deductions and filings, and published fees are on the pricing page. This article is general information, not advice for your situation.

Sources & editorial notes

Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.

Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.