Personal Services Corporation (PSC) Risk for Independent Contractors
- 13 years ago
PSC risk may also apply to other independent professionals like consultants, engineers and project managers. I’d also like to tell you about what CA4IT has done to assist and protect our clients regarding this matter.
Independent contractors benefit from the following income tax advantages:
1- Income retained in the corporation qualifies for the small business deduction resulting in a low corporate income tax rate of approximately 15.5%,
2- Overall income tax can be lowered using income splitting to pay reasonable salaries and dividends to family members.
3- The corporation is entitled to deduct a fairly broad variety of business expenses that were incurred in order to earn business income.
This business video addresses the risks and benefits associated with the Personal Services Corporation or Personal Services Business CRA income tax issue.
Independent contractors benefit from the following income tax advantages:
1- Income retained in the corporation qualifies for the small business deduction resulting in a low corporate income tax rate of approximately 15.5%,
2- Overall income tax can be lowered using income splitting to pay reasonable salaries and dividends to family members.
3- The corporation is entitled to deduct a fairly broad variety of business expenses that were incurred in order to earn business income.
This business video addresses the risks and benefits associated with the Personal Services Corporation or Personal Services Business CRA income tax issue.