In theory the integration of taxes make the tax implications of paying salary or dividends equal. This is what happens when you calculate the taxes using a generic tax calculator, however, the theory breaks down in certain cases.
If you are earning less than $100k there is very little difference and paying out a salary is usually the better option. In a large stable company the most efficient option is almost always a mix of both.
If you are earning more than $100k a year it depends on a number of factors:
1) Are your companies annual earnings over $500,000?
In Canada, private companies that earn more than $500,000 annually are taxed at a higher rate than those earning less than $500,000. If the earnings are above $500,000 generally you should reduce the earning to under $500,000 by paying a salary. However, this depends on the province, the other income of the owners are and how much more than $500,000 your company earns.
2) Are you eligible for deductions or benefits only available on earned income? Earned income is income that you have worked for, which does not include dividends.
RRSP contribution room, child care expense deductions, CPP, and many other benefits under the CRA rules are only available to people who have an earned income. It is worth taking advantage of these deductions when they are available.
3) Is your company eligible for any tax deductions?
The same as with your personal tax deductions and your personal benefits of earning income, having a corporate income is also a benefit. There are a number of tax credits and tax deductions that corporations can take advantage of and when available these should be taken advantage of before paying everything out in salary.
Once all these questions are answered the calculation is based on your marginal tax rate and the tax rate of the Corporation.
One other reason to have at least a portion of you salary as a dividend is that if you incur capital loss in your corporation you can pass them to your personal taxes. If you were payed 100% in salary this does not work.
Other strategies to be more tax efficient:
Income splitting (Pay a salary/dividend to yourself, your wife, your children your parents, or anyone you support). Rolling-over property with taxable gains into your private corporation. Buying insurance policies that gives a return of premium or increase your Capital Dividend Account (CDA).