Example · Quebec
Quebec doctor's corporation: salary or dividends?
Sophie is a family doctor in Montreal, 46, with $1.5 million invested in her medical corporation. She pays herself a $95,000 salary and takes dividends for the rest. Would she do better taking the dividends that get back her corporation's refundable tax first, then a salary for what she's short?
The household
- The corporation bills $420,000 a year and pays $110,000 a year in clinic overhead, until Sophie retires at 63.
- It doesn't have enough paid hours for Quebec's small business rate, so Quebec taxes its business income at the general rate. The federal small business rate still applies.
- It holds $1.5 million invested and $40,000 in its operating account. Its capital dividend account has $85,000.
- Sophie has $140,000 in her RRSP and $60,000 in her TFSA. Her QPP starts at 65.
- Her home is worth $1.6 million, with $700,000 left on the mortgage. She spends $7,000 a month, plus the mortgage and the home's upkeep.
What Kilter found
With her set salary, Sophie's chance of success is 75% and her estate after tax is $4.1 million.
Taking refundable tax first, her estate is $4.5 million, about $380,000 more. Her chance of success is 80%, 5 points higher than with her set salary. Over her life she pays about $189,000 more in personal tax, and her corporation about $357,000 less in corporate tax.
Taking refundable tax first, tax over a lifetime is higher because her bigger estate pays about $192,000 more tax at death. Before then, she and her corporation pay about $168,000 less together. While she works, taking refundable tax first pays her mostly in salary. The set salary pays her mostly in dividends.
| Choice | Chance of success | Estate after tax | Tax over a lifetime |
|---|---|---|---|
| Set salary of $95,000, then dividends | 75% | $4.1 million | $3.6 million |
| Dividends that free refundable tax, then salary | 80% | $4.5 million | $3.6 million |
Estate and tax in today's dollars, assuming typical returns. Tax is personal, corporate and at death.
- Set salary of $95,000, then dividends
- Dividends that free refundable tax, then salary
- Half the simulations end inside the band (Set salary of $95,000, then dividends)
Why the paid hours matter
A salary is deductible, so the corporation pays no tax on what it pays as salary. Dividends come out of what's left after its tax. At Quebec's general rate, that tax is higher than at the small business rate.
Kilter ran both choices again as if the corporation had enough paid hours for Quebec's small business rate. Taking refundable tax first, the chance of success is then 2 points higher than with her set salary, and the estate about $106,000 more. So here, most of what it adds comes from the general rate. Another household's answer depends on how much its corporation has invested, what it earns and what the household spends. Kilter runs every month of each choice, with each year's Quebec and federal tax, to see.
Open this household in KilterA free demo, no sign-up. Change anything you like.
How Kilter worked it out
Kilter ran this household month by month from November 2026 to the end of the plan, with each year's federal and provincial tax, the corporation's own tax and the tax at death. The chance of success is the share of 2,000 market simulations in which every expense is paid. Everything else assumes typical returns, in today's dollars with 2.5% inflation. The household is made up from a real question. Open it as a demo to change anything and see it all recalculate.