The numbers
The $100,000, worked through.
Every rate on this site, every step of the scenario, and where each number comes from. Written so your accountant can check it line by line.
Ontario, as of September 2026. Rates change; this page is updated when they do.
Eight numbers. Everything else follows from them.
Where two figures differ by fiscal year, the one in force from July 1, 2026 is used. A year that straddles July 1 is prorated.
- Small business rate, first $500,000 of active income
- 11.2% Federal 9% plus Ontario 2.2% from July 1, 2026. Ontario's rate was 3.2% before that, so a calendar 2026 year blends to about 11.7%.
- General corporate rate
- 26.5% Federal 15% plus Ontario 11.5%.
- Investment income inside a corporation: interest
- 50.17% Of which 30.67% is refundable when a taxable dividend is paid out.
- Investment income: portfolio dividends
- 38.33% Part IV tax. Refundable when a taxable dividend is paid out.
- Investment income: capital gains
- 25.09% Half the gain is taxable at 50.17%. The other half credits the capital dividend account.
- Passive income line
- $50,000 Each $1 of adjusted aggregate investment income over $50,000 removes $5 of the federal $500,000 limit. Gone entirely at $150,000. Federal only: Ontario does not reduce its own limit.
- Top personal rate, non-eligible dividends
- 47.74% Ontario, 2026, at the top bracket. Most owners pay less.
- Top personal rate, salary and interest
- 53.53% Ontario, 2026, at the top bracket.
Four steps. Each one checkable.
The homepage tells this as a story. This is the same story with the arithmetic showing. The assumptions are stated so you can change them: a 6% return split as 2% dividends and 4% realized gains, an owner at the top bracket, and a corporation already earning $500,000 of active income.
1. In: $100,000 becomes $88,800
$100,000 × 11.2% = $11,200 of corporate tax. $88,800 stays in the corporation.
2. Growth: $5,328 earned, $3,756 kept
$88,800 × 2% = $1,776 of dividends, taxed at 38.33% = $681. $88,800 × 4% = $3,552 of realized gains, taxed at 25.09% = $891. Tax of $1,572 leaves $3,756, an after-tax return of 4.23%. Most of that $1,572 is refundable, but only when the corporation pays you a taxable dividend, which is then taxed personally. Until it leaves, it is not working.
3. Ten years: about $1M, then the line
$88,800 added each year and compounding at 4.23% reaches about $1.08M after ten years. The site says "about $1M." At 6% that is about $60,000 a year of investment income. Dividends count in full toward the passive income line and only half of a realized gain does, so a portfolio weighted to unrealized gains reaches the line later, not never. If $60,000 counts, that is $10,000 over the $50,000 line, so $50,000 of the federal small business limit is removed. Federal tax on that $50,000 goes from 9% to 15%: about $3,000 more that year. Ontario does not follow the federal reduction, so its 2.2% still applies. At $150,000 of passive income the whole federal limit is gone: 6% × $500,000 = $30,000 a year.
4. Out: $88,800 becomes $46,400
Paid out as a non-eligible dividend to an owner at the top bracket: $88,800 × (1 − 47.74%) = $46,407. An owner below the top bracket keeps more. The refundable tax from step 2 comes back to the corporation as this dividend is paid, which is the mechanism the tax system uses to keep corporate and personal tax from fully stacking. It reduces the total. It does not remove any of the three points at which tax is paid.
Three claims, with their edges.
Each of these is a real feature of an exempt, corporate-owned participating whole life policy. Each has a boundary, and the boundary is written here.
No annual tax while it grows
Growth inside an exempt policy is not taxed in the corporation's hands year by year. It is not literally untaxed: the insurer pays a 15% investment income tax on the assets backing policies, priced into the policy. The Department of Finance describes the treatment as a deferral and a rate reduction. The corporation files nothing on it annually.
Not passive income
Growth inside an exempt policy is not adjusted aggregate investment income, so it does not count toward the $50,000 line. Income from a non-exempt policy can. Every policy we place is tested as exempt.
Leaves tax-free through the capital dividend account
At death the benefit is paid to the corporation. The amount above the policy's adjusted cost basis credits the capital dividend account, and the corporation elects to pay that out to Canadian-resident shareholders as a tax-free capital dividend. The cost basis portion does not credit the account. Access during life is a separate matter: withdrawals and dispositions can be taxable, which is why income is drawn as a collateral loan against the policy, not a withdrawal.
The protection figures, sourced.
- Survive a stroke
- 80% Heart and Stroke Foundation of Canada: about 80% of the 40,000 to 50,000 Canadians who have a stroke each year survive it.
- Median time to a full return to work after cancer
- 8 months 239 days, from a 2026 systematic review and meta-analysis in JCO Global Oncology. The same review found 47% of patients return to work fully.
- EI sickness benefit, employee, 2026
- $18,954 $729 a week maximum for up to 26 weeks.
- EI sickness benefit, owner controlling more than 40% of voting shares
- $0 Not insurable employment under the Employment Insurance Act. An owner can register separately for EI special benefits for self-employed people, must wait twelve months, and then receives at most the same $729 a week.
- Critical illness benefit
- Tax-free Where the corporation owns the policy and is the beneficiary, a lump-sum benefit is generally not taxable. This follows from general principles and CRA technical interpretations; there is no dedicated provision in the Income Tax Act as there is for life insurance. Benefits become payable once the policy's survival period is met, usually thirty days after diagnosis, and after proof of claim.
- Return of premium
- Rider An optional rider that returns the premiums it defines as returnable if the policy is never claimed on, at the dates it sets. The rider's terms govern, and some rider premiums and unpaid amounts can be excluded.
Where to check it.
This page is a worked illustration on public rules, not advice on your corporation. The review is where the numbers become yours, and where your accountant is welcome.
- Ontario Budget 2026: small business rate reduced to 2.2% effective July 1, 2026.
- Canada Revenue Agency, corporation tax rates: federal 9% small business rate and 15% general rate.
- Canada Revenue Agency, T2 Corporation Income Tax Guide: small business deduction, the passive income reduction, Part IV tax and refundable dividend tax on hand.
- Ontario 2018 Fall Economic Statement, annex: Ontario will not parallel the federal passive income reduction of the small business deduction.
- Ontario Ministry of Finance, personal income tax: 2026 brackets and rates behind the 53.53% and 47.74% top combined rates.
- Canada Revenue Agency, Income Tax Folio S3-F2-C1, Capital Dividends: life insurance proceeds above the adjusted cost basis credit the capital dividend account.
- Department of Finance Canada, Report on Federal Tax Expenditures: treatment of investment income accruing in exempt life insurance policies, and the 15% investment income tax paid by insurers.
- Government of Canada, EI sickness benefits: $729 a week maximum, up to 26 weeks, 2026.
- Government of Canada, EI special benefits for self-employed people: registration, the twelve-month wait, and the benefits available.
- Heart and Stroke Foundation of Canada: stroke incidence and survival.
- Allman et al., JCO Global Oncology, 2026: systematic review and meta-analysis of labour outcomes after cancer; median 239 days to full return to work.