Using Your Corporation’s Money: What Canadian Business Owners Can — and Can’t — Do

If you run a corporation in Canada, it’s easy to think of the business bank account as your money. After all, you own the company.

But from the CRA’s perspective, your corporation is a separate legal entity — and how you take money out matters a lot.

Here’s what Canadian business owners need to know.

Your Corporation’s Money Isn’t Personal Cash

Even if you’re the sole shareholder, corporate funds don’t automatically belong to you. Taking money out the wrong way can lead to unexpected taxes, penalties, and CRA reassessments.

The key is using one of the CRA-approved methods.

Legitimate Ways to Take Money Out

Salary or Wages

• Deductible to the corporation

• Taxed personally

• Requires payroll remittances (CPP)

  
  

Best for predictable income and building RRSP room.

Dividends

• Paid from after-tax corporate profits

• Often taxed more efficiently than salary

• No CPP contributions

  
  

Best for flexibility and tax planning.

To learn more about whether paying yourself a salary or a dividend is best, see our blog post on the subject. https://www.trunorthaccounting.ca/post/salary-vs-dividends-how-should-you-pay-yourself-in-canada

Shareholder Loans (With Care)

• Allowed if repaid within CRA deadlines

• Must be tracked properly

• Miss the deadline and it may become taxable income

  
  

What Not to Do

❌ Pay personal expenses directly from the corporation

❌ Treat the business account like a personal ATM

❌ Take money without recording it as salary, dividends, or a loan

These are common CRA red flags.

Why This Matters

The way you access corporate funds affects:

• Your personal tax bill

• CPP obligations

• CRA audit risk

  
  

Often, a combination of salary and dividends works best — but the right mix depends on your goals and cash flow.

Bottom Line

Your corporation’s money is powerful, but it has rules.

Taking money out the right way helps you stay compliant, minimize tax, and avoid costly surprises. If you’re unsure which method makes sense for you, getting advice before you move money can save you far more in the long run.