As corporations are a separate legal entity they are also by virtue a separate entity for tax purposes as well. The T2 Corporate Income return is much for complex than the T1 Personal Income Tax Return. Special consideration must be made by your accountant to determine whether or not to treat the owner draws from the company as a salary (T4) or dividend (T5). In some situations a mix of salary and dividends is most advantageous. Some of the income tax benefits of operating as a limited company include the small business deduction for corporations involved in active business and tax free disposal of qualifying small business shares on capital gains up to $750,000.00.