Can a Canadian Corporation pay its owner less than the minimum wage? Is there a minimum amount when running the payroll?

  • I'm pretty sure if anybody does work you have to pay them at least minimum wage. Of course owners don't always do work. What work is he/she doing? Oct 6 at 2:30
  • 1
    Owners not taking their salary when things are rough is common as dirt. Nobody forces you to pay yourself. If someone is claiming they can't pay you because they are required by law to pay themselves minimum wage, they're lying. Oct 6 at 9:59
  • Are you making this decision based on limited cash availability, or because you want to avoid salary and pay yourself dividends? Different economic realities could lead to different interpretations. Oct 6 at 13:26

It can pay it's owner nothing - as an owner. Owners are not entitled to anything at all, except for one single status: The owner is "owed" proportional votes at the yearly general assembly. It is custom for the largest owner to be, or select, the chairman and it is customary to have the largest owners represented on the board - but in actuality it is a just simple majority necessary, at the general assembly.

If the owner is also an employee, that is a different thing.

  • I'm the owner and the only employee of my corporation. I want to have the payroll setup, but I don't want to pull too much money.
    – hossa
    Oct 6 at 11:08
  • This isn't a great answer - there is a fair bit of jurisprudence on this [the underlying nature of the question is: how small is the 'fair' salary I can pay myself, with remainder going as dividends, due to the complex interaction between the two and the potential there for abuse]. Oct 6 at 13:16
  • I agree, @Grade'Eh'Bacon that there might indeed be an optimum for tax purposes but that would be a very personal recommendation type question, since it would involve a lot of different and personal information. Spouse, no spouse, dependants, income level, income desired, finances of the corporation, type of corporation... As it stands the question has a definite and common answer. It can pay nothing. That is then the minimum. Oct 6 at 13:52
  • That's all I need to know: if I want to run the payroll, what is the minimum I have to pay myself as the owner of the corporation. I'd like to be able to pay myself, let's say, $5/hour. Please stay within the topic, my question is not about the tax optimisation or anything else. Though, my goal is the optimisation of the taxes, but that is perfectly legal as long as no law violation.
    – hossa
    Oct 6 at 14:24
  • @hossa Careful. A statement like "my question is not about the tax optimisation or anything else. Though, my goal is the optimisation of the taxes, but that is perfectly legal as long as no law violation. " is indication that the intent of your action is to reduce taxes. That's one of 3 tests to determine whether the General Anti-Avoidance Provision applies [1) Does it reduce taxes? 2) Was it done primarily to reduce taxes? 3) Is it an abuse of the intent of the Income Tax Act?] - though this is rarely applied. Oct 6 at 14:34

Stian Yettervick's answer is correct about the minimum a corporation needs to pay its owner (i.e. nothing).

If a corporation chooses to pay a salary the only restriction is the minimum wage laws of the province. Of course an owner is free to set their own hours, so if they work few enough official hours you could set it at a pretty low level.

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