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Physician guide · 2026
Salary or dividends from a medical corporation in 2026?
For most incorporated physicians the answer is a mix: enough salary to build RRSP room and CPP, and dividends for the rest. Two Ontario changes in 2026 and 2027 make this year a good one to re-run the numbers.
Side by side
What each one does.
| Question | Salary | Dividends |
|---|---|---|
| Deductible to the corporation? | Yes | No, paid from after-tax profit |
| Creates RRSP room? | Yes, 18% of salary up to the annual maximum ($33,810 for 2026) | No |
| CPP | Both employee and employer shares are paid, and you earn a CPP pension | None paid, none earned |
| Paperwork | Payroll account, monthly remittances, T4 | Director's resolution and a T5 |
| Personal tax | Ordinary income | Lower rate through the dividend tax credit, because the corporation already paid tax |
| Useful for | RRSP and pension building, mortgage applications, child-care deduction | Flexibility, topping up income, years when cash is tight |
What changed
Why 2026 is a year to revisit the mix.
- July 1, 2026: Ontario's small business rate fell from 3.2% to 2.2%. The cut is prorated across a year that straddles July 1, so income left in the corporation is taxed at about 11.7% combined for a December 31, 2026 year-end, and about 11.2% from 2027.
- January 1, 2027: Ontario's dividend tax credit on non-eligible dividends falls to match, so the same dividend costs slightly more personal tax from 2027.
Together the two changes keep the system roughly neutral, but the timing matters: a dividend you were planning for early 2027 may be cheaper in late 2026. It depends on your other income, so it needs a calculation, not a rule of thumb.
A common starting point
Salary of roughly $188,000 earns the maximum 2026 RRSP room. Many physicians pay themselves around that level, contribute to the RRSP, and take any further personal cash as dividends. Those with a spouse on payroll for real work, an IPP, or large retained earnings will land somewhere else.
Quick answers
What physicians ask about paying themselves.
Is it better to pay myself salary or dividends from my MPC?
Usually a mix. Salary builds RRSP room and CPP and is deductible to the corporation; dividends are simpler and flexible. Total tax is designed to be similar, so the choice turns on retirement savings, cash needs and your other income.
How much salary do I need for the maximum RRSP contribution?
About $188,000 of salary in 2025 creates the maximum $33,810 of RRSP room for 2026, because room is 18% of the prior year's earned income.
Do dividends count for a mortgage?
Lenders accept them, but usually want two years of history and the corporate statements. A steady salary is simpler to document.
Can I pay my spouse from the corporation?
A reasonable salary for work actually done is deductible. Dividends to a spouse are generally caught by the income-splitting rules until you turn 65 — and dividends to adult children or parents stay caught indefinitely, because a professional corporation cannot use the excluded-shares exception. See the guide on family shares.
Sources: CRA RRSP limits; the 2026 Ontario Budget for the small business rate and dividend tax credit changes. General information, not advice for your situation. See also family shares and income splitting and when to incorporate.
Want your 2026 mix worked out?
Call 647-870-8498 or email info@ghayurtax.com. We plan the T2 and the family's T1s together.