Problem

Balancing personal cash flow with long-term tax strategy can be complex, especially for professionals involved in research and development. Our client needed $150,000 in salary to meet monthly expenses but also wanted to build RRSP room and reduce corporate taxes. With eligibility for the SR&ED credit, it became clear that traditional compensation methods—like splitting salary and dividends—would not maximize the benefits available.

The challenge: meet immediate income needs, optimize SR&ED eligibility, and reduce taxes — all while planning ahead for a financially secure future.

Solution

We created a comprehensive 2026 tax strategy centered on a salary-only compensation approach. This allowed the client to both meet their $9,000/month lifestyle needs and align salary with the 2027 RRSP contribution threshold of $35,390. To ensure eligibility for the maximum SR&ED claim, dividends were removed from the equation, and salary was increased to $200,000.

Key components of the strategy included:

• Increasing salary to align with RRSP contribution requirements
• Maximizing the client’s SR&ED claim by removing dividends
  Strategically timing the 2025
• RRSP contribution for inclusion in the 2026 SR&ED claim
• Projecting corporate tax before and after optimization to highlight the financial impact

Results

By implementing this strategy, our client saw measurable tax savings and credit optimization:

• Corporate tax reduced from $26,230 to $12,261
• SR&ED credit increased from $53,300 to $83,070
• $43,739 in combined tax savings through optimized timing and claim maximization
• Effectively zero tax paid on $480,000 of total income in 2026
• Strategic incorporation and a salary-only structure positioned the client for long-term success

This personalized approach ensured the client met both short-term income needs and long-term wealth-building goals — all while leveraging every available tax advantage.