Paying Yourself Through a PREC: Salary or Dividends in Ontario

If you are a registered real estate salesperson or broker in Ontario with a personal real estate corporation, often called a PREC, you will eventually ask a practical question: how do you get money out of it? The two most common answers are salary and dividends, and each has different consequences.

This article explains how a PREC fits into the way you are paid, what the CPP numbers look like, and what to settle before you choose. It is general information, not tax advice. The best approach depends on your income, family, savings and plans, so an accountant should confirm the numbers for you.

How a PREC fits into the way you are paid

A PREC is exempt from registration, but it may not trade in real estate itself. Its only permitted role is supplying its controlling shareholder's services to a brokerage, and it may not advertise as trading in real estate. You remain the registrant who does the work. The corporation is the channel through which the brokerage pays for your services.

The registrant, the PREC and the brokerage must sign an agreement on the use of the PREC and the payment of remuneration. The brokerage must confirm that the PREC qualifies before paying it, and it is not obliged to enter into the agreement. If your brokerage has not yet signed, you should not assume commissions can simply be redirected to your corporation.

What the corporation must look like

A PREC must be an Ontario Business Corporations Act corporation with one controlling shareholder. That person is the registered broker or salesperson and is also the president and sole director and officer. Non-voting shares may be held by that person or by family members. The rules are in O. Reg. 536/20.

Who can hold non-voting shares matters for dividends, because dividends are paid on shares. Which family members should hold shares, and what that means for your taxes, is a question for your accountant and lawyer together.

Housekeeping also matters. Changes to the PREC's legal name or address for service must be reported to RECO within five days.

Salary versus dividends: the CPP difference

The clearest, most concrete difference is the Canada Pension Plan. Salary paid by a PREC attracts CPP from both the employee and employer sides, while dividends do not attract CPP.

The 2026 CPP figures are set out below. Earnings above the annual maximum pensionable earnings may also trigger CPP2 deductions, which have applied since January 1, 2024 and are set out on a separate CRA page.

Notice the last line: the 2026 maximum for a self-employed person is $8,460.90. How the CPP cost of a salary from your PREC is divided between you and the corporation is worth confirming with an accountant.

Other points to weigh with your accountant

CPP is only one piece. The income tax result of a salary compared with a dividend depends on corporate and personal tax rates, your other income and what you plan to do with the money. Those rates are not covered here, and they can change, so get current figures from an accountant before you decide.

• Do you want to build CPP pension entitlement, or would you rather not pay CPP and save privately?
• Do you need steady personal income for a mortgage application or household budget?
• Will you leave money in the corporation for slow months, taxes or investing?
• Will family members hold non-voting shares, and who would receive dividends?
• Does your brokerage agreement say anything about how and when the PREC is paid?

What to do next

• Confirm your corporation meets the PREC structure: Ontario OBCA corporation, one controlling shareholder who is president and sole director and officer.
• Make sure the three-party agreement with your brokerage is signed before commissions are paid to the PREC.
• Ask your accountant to model salary, dividends and a mix, including CPP at the 2026 figures and any CPP2 amounts.
• Keep your RECO details current and report name or address-for-service changes within five days.
• Ask a lawyer to review share structure and the shareholder arrangements if family members will hold shares.

Frequently asked questions