ABOUT THE COURSE

The professional corporation still delivers meaningful tax deferral, but three developments have changed the planning landscape: TOSI restrictions on income splitting, passive income rules that reduce the small business deduction, and the personal services business designation that can push the effective corporate rate to 42% with limited expense deductions. Getting the structure right requires understanding which of these apply to a given professional and which structural model fits their practice type, their professional body's ownership rules, and their income extraction goals.

This course works through the issues that determine whether a PC structure performs as intended:

• The PSB designation: when an incorporated professional is treated as an employee, triggering a 42% corporate rate and restricted expense deductions
• Ownership restrictions by profession in Ontario: CPA, lawyer, and doctor/dentist structures each operate under different permitted shareholder rules
• The $500,000 small business limit and how it is shared among associated corporations, management companies, and multi-professional arrangements
• TOSI application to dividends paid through PC and side structures, and the exceptions where income splitting survives
• Six structural models from sole practitioner without a PC through to multi-professional multiple billing PC arrangements, and the tax consequences of each
• The weekend roll-and-redeem strategy for creating non-voting preferred shares and extracting capital gains through a holdco
• Taxable incorporation: valuing the practice, triggering a capital gain on transfer, taking back a note, and extracting income at the 27% capital gains rate versus 39% or 47% personal rates

The complications most commonly arise when an incorporated professional assumes their structure is still working as designed. A management company that shares the $500,000 limit with the PC reduces the deferral benefit. A professional who is the sole service provider to their own PC and has no other clients faces PSB exposure. A partnership of professionals incorporating their billing PCs may find the small business deduction shared across all of them rather than available independently. Section 84.1 issues arise on transfer of a PC's shares. Negative ACB on a partnership interest creates problems at the time of incorporation if timing is wrong.

The course covers the full range of planning situations a practitioner will encounter: the sole professional who has never incorporated and needs to understand whether it is still worth doing, the multi-professional partnership evaluating corporate options, the doctor or dentist with retained earnings looking to extract $2 million at capital gains rates, and the professional whose existing structure no longer delivers because the rules around it have changed. Each strategy is grounded in the current rate environment, including the material difference between a 12.5% small business rate on deferred income versus 47% personal tax paid today.