The $9,000 Myth: What CPP Really Costs You

Featuring Aravind Sithamparapillai, CFP, CIM, MBA

If you’ve talked to your accountant about compensation planning, you’ve probably heard some version of this line: “You could save about $9,000 a year if you paid yourself dividends instead of salary, because you’d avoid CPP contributions.” For a lot of incorporated chiropractors, that one sentence is enough to settle the salary-versus-dividends debate for good.

We sat down with Aravind Sithamparapillai— a fellow financial planner who ranked first nationally on the 2025 CFP exam and has become known for digging into the questions other advisors wave away —to pressure-test that number. His conclusion: the $9,000 figure isn’t wrong, exactly. It’s just incomplete.

Why $9,000 isn’t the real number

That $9,000-ish figure (the combined 2026 employer and employee CPP contribution) is what Aravind calls a “top line to top line” comparison — it looks at the raw dollars going in, not what those dollars are actually costing you after tax.

Once you follow the money all the way through, four separate tax effects chip away at that number:

The employer portion is a corporate deduction. The CPP your corporation contributes on your behalf reduces your corporation’s taxable income, the same way salary or any other business expense does. That’s real value you’d otherwise lose if you skipped the contribution and paid the money out as a dividend instead.

The base employee portion earns a tax credit, and the newer “enhanced” portion is a personal deduction — meaning its value actually grows as your income (and tax bracket) climbs.

Integration isn’t perfect. In theory, routing the same dollar amount through salary or dividends should cost you roughly the same tax either way. In practice there’s a small gap — often a quarter to half a percent — that usually favours salary. On $200,000 of compensation, that’s an extra $1,000 or so working against the “just take dividends” strategy.

The dividend gross-up can quietly cost families money. When dividend income gets grossed up on your tax return, it inflates your stated net income — which can shrink income-tested benefits like the Canada Child Benefit, even though your tax bill nets out the same.

Stack all of that up, and Aravind’s math puts the real, after-tax cost of CPP closer to $5,000–$7,000 a year — not $9,000. His advice if you want to see it for yourself: ask your accountant to actually run the same compensation amount through your corporation both ways, salary and dividends, and compare what lands in your hands.

CPP isn’t really a tax — it’s an asset class

The bigger mindset shift Aravind pushes for isn’t about the math —it’s about how business owners frame CPP in the first place. General taxes fund shared infrastructure you can’t personally claim against. CPP is different: there’s a direct, calculable link between what you contribute and what you’re entitled to receive later. That makes it an investment, not a tax.

And it’s a strange investment, at that. Depending on the age at which a given year’s contribution is made, Aravind’s modelling puts the guaranteed, after-tax, inflation-adjusted return somewhere between roughly 3–4%for a contribution made in your 20s, climbing into the double digits for contributions made later in your career — a hurdle rate that’s genuinely difficult to beat with a taxable corporate investment portfolio, once you account for the tax drag on passive income inside a corporation.

It also comes with insurance-style protections that rarely get factored into anyone’s mental math: a survivor benefit for your spouse, an orphan’s benefit for minor children (which can extend through post-secondary),and a disability benefit. Price those in separately and the effective cost of CPP drops even further.

When dividends do make sense

None of this means salary always wins. Aravind flagged a few specific situations where leaning into dividends is the right call:

•            You’ve already maxed out your CPP entitlement (roughly 40 years of contributions between ages 25–65,sometimes fewer with child-rearing drop-out provisions).

•            You have other employment income where you’re already maxing CPP as an employee.

•            You need to clear out “notional accounts” — refundable tax pools sitting with the government that only get released when you pay out dividends.

The takeaway

CPP is a decision you’re making every year, whether you realize it or not — and it’s not one to make off a single headline number from your accountant. As Aravind put it, the real value comes from your accountant and financial planner actually talking to each other and running the numbers for your specific situation, year by year.

Want to hear the full conversation, including how CPP stacks up against building wealth inside your corporation? [Listen to episode 037 of The Chiro Money Show →]

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