6 Ways To Use Your Corporation to Save for Retirement

If you’re a Canadian business owner, you’ve already broken barriers by building your own success. But when it comes to retirement, many business owners don’t understand how to use their corporation to help save for their retirement. Your corporation can be more than just your work vehicle — it can be your retirement strategy too.

Here are 6 powerful ways to use your corporation to fund the future you deserve:

1. Pay Yourself Dividends — But Strategically

It’s tempting to just pay yourself dividends and call it a day. They're flexible and taxed lighter than salary at the personal level. But here's the catch: no salary = no RRSP room = no CPP contributions = less security later.

Tip: Mix it up. Pay a modest salary to build RRSP room and contribute to CPP (it’s a guaranteed, inflation-protected stream of retirement income later), and top up with dividends for tax efficiency.

2. Set Up an Individual Pension Plan (IPP)

Think of an IPP as a supersized RRSP for high-income earners.

Your corporation can set up an IPP for you, contribute bigger amounts than an RRSP allows, and get a corporate tax deduction. Bonus for women: Since women statistically live longer, an IPP can fund a longer retirement more safely.

Tip: IPPs make the most sense if you're 40+, consistently earning $100K+ through your corporation, and planning to retire from the business.

3. Open a Corporate Investment Account

If your corporation is holding on to cash after paying you, make it work.

Corporate investment accounts let you grow your wealth inside the business (think stocks, bonds, mutual funds).

Watch out though:

● Passive investment income over $50,000 can claw back your small business tax rate.

● You need smart tax-efficient investment choices.

Tip: A well-structured portfolio focused on capital gains (rather than dividends or interest) can lower corporate taxes.

4. Consider an Insured Retirement Strategy

This one sounds fancy but it’s simple:

Use corporate dollars to fund a permanent life insurance policy (like whole life or universal life). The policy grows tax-sheltered inside the corporation. Later, you can borrow against it to create retirement cash flow without triggering big taxes.

Why it matters: Insurance can also protect your business and family if something unexpected happens.

5. Sell Your Business (the Smart Way) and Use the Lifetime Capital Gains Exemption

If you plan to sell your business someday, the first $1 million+ (indexed yearly) of capital gains may be tax-free under the Lifetime Capital Gains Exemption (LCGE).

That’s a major retirement win — if your company qualifies.

Tip:

● Keep your business "clean" (no passive assets, no messy shareholder structures) to qualify.

● Start planning years before you sell — last-minute fixes rarely work.

6. Set Up a Retirement Compensation Arrangement (RCA)

An RCA is a powerful tool if you expect your retirement needs to be higher than what an RRSP or IPP can cover. It's basically a corporate-funded retirement account that lets your business make tax-deductible contributions, helping you build a bigger nest egg outside of RRSP limits.

How it works:

● Your corporation funds the RCA.

● Half the contributions are held in a refundable tax account (yes, the government keeps some aside), but the investment growth inside the RCA is largely tax-deferred.

● You draw from the RCA in retirement when you're in a lower tax bracket.

Perfect fit for:

● Entrepreneurs planning to step back slowly (rather than fully sell/exit)

● High-income earners who want more control and more security

● Business owners who want to reward themselves after years of reinvesting in everyone else

Bottom Line:

Your corporation isn't just a source of income — it's a retirement asset if you use it wisely.

You deserve to build retirement strategies that honour your ambition, protect your well-being, and keep you independent for the long run. You’ve already done the hard work of building your business. Now it’s time to make sure your business takes care of you.

Want help designing a plan that fits your real life, not some cookie-cutter version?

Let’s connect and build a retirement strategy that reflects the powerhouse you are.