How to pay yourself without harming the farm

Paying yourself from the farm isn’t always straightforward, especially if your operation is incorporated. Draw too much, and you risk weakening the business. Draw too little, and you shortchange your family and security. Find balance using a mix of salary, dividends and other tools to give yourself a fair income while protecting the farm’s finances.

Salary vs. dividends
Paying yourself a salary (wages that create RRSP room but require payroll deductions) or dividends (profits paid to you as a shareholder, often taxed at a lower rate but without RRSP room), or a mix of both, depends on your financial goals.

“With wages, you’ve got deductions – the big one being Canada Pension Plan (CPP) contributions,” says Mike Bossy, chartered professional accountant with Bossy Nagy Group in Tillsonburg, Ont.

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