Can I pay my spouse or kids through my business?
Yes — for real work at a reasonable wage, properly on payroll. Splitting income with dividends is a different story, tightly restricted by the TOSI rules.
Two very different things hide in this question: paying family for work, and shifting income to family. The first is legitimate and common; the second is what the rules exist to stop.
Wages for real work
A spouse doing your admin or a teenager doing site cleanup can be paid like any employee: real duties, a rate you would pay a stranger, actual payment records, on payroll with source deductions and a T4. Done that way it is deductible to the corporation and stands up to review.
Dividends: the TOSI wall
Since the tax on split income rules, dividends to family members who are not genuinely engaged in the business are generally taxed at the top personal rate — killing the old sprinkle-dividends-to-the-family strategy. Exceptions exist (significant labour contribution, meaningful ownership at certain ages, and others), and they are specific enough to need an accountant’s eyes.
The test to remember
Would the arrangement look sensible if the person were a stranger? Reasonable pay for real work passes. Payments calibrated to someone’s tax bracket do not.
This is general information, not tax advice for your situation. Book a call and a Canadian accountant will give you the answer for your business.
Common questions
How much can I pay my spouse without problems?
A reasonable market rate for the actual work performed — documented duties, tracked hours or deliverables, real transfers, T4 at year-end. The amount defends itself when the work does.
Can my adult kids own shares and take dividends?
They can own shares, but TOSI generally taxes their dividends at the top rate unless they meet an exception, like genuinely working in the business regularly. Structure this with an accountant, not a template.