Can I time my salary or dividend draws to manage cash flow in my Ontario corporation?

Timing is one advantage dividends have over salary. A dividend can be declared and paid at any time the board chooses, with no mandatory remittance schedule to the CRA. You can accumulate the corporation's after-tax income and draw dividends in lump sums aligned with your personal cash needs — end of year, before a purchase, or in a lower-income personal year.

Salary creates a remittance obligation on the corporation. Once salary is paid, source deductions must be remitted to the CRA by the deadline for your remitter category. For most small businesses this is the 15th of the following month. Salary is therefore less flexible in timing — you cannot decide in January to pay yourself a December salary without the December remittance already being overdue.

From a personal cash flow perspective, dividends also arrive without deduction — the corporation pays the full declared amount, and you pay tax on it when you file your personal return at the end of April. Salary arrives net of withholding. For business owners who need to manage the timing of personal tax payments, dividends can give more control, especially paired with installment payment planning on the personal side.

Combine cash flow flexibility with the structural considerations — RRSP, CPP, remittances — when deciding the mix for each year.