Personal Service Corporation Canada. Most business deductions will be disallowed, and interest and taxes will be imposed for up to 3 years back. According to the canada revenue agency (cra) a personal services business is a corporation that provides services performed by individuals for the corporation, or a person related to the individual providing the services is a shareholder of the corporation, providing services to another entity provided there are not more than 5 employees.
Then the net income is transferred to the owner as dividends, on which he pays about 3,900 personal tax assuming ontario rates. The business account will be used to keep track of income tax payments and other tax records. A personal services corporation is a canadian tax designation for a corporation where the shareholder would be considered an employee if it weren't for the corporate structure.
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The services provided by a personal service corporation may include any activity performed in the following fields. A personal service corporation is a specific tax entity recognized by the internal revenue service for businesses that provide personal services to customers, including law firms and medical offices. How to avoid being classed as a personal services corporation by the cra. The service canada phone representative will let you know when you could receive your access code.