Personal Services Business Incorporated Employee
This is very common for the employers to avoid expenses by asking their employees to sign contracts as corporations in Canada. If you are an IT professional in Canada and your employer has asked you to incorporate a business and sign the contract, you must know the tax implications of these decisions. When a corporation has an incorporated-employee who performs services on its behalf, it is called Personal Services Business (PSB) as per Income Tax Act in Canada. First, see if your relationship is of employee or independent contactor with the business for whom you are providing these services. IF the relationship is of employment nature, your corporation will be a PSB. If the relationship is of independent contractor, you have an active business income. Now, determining whether the relationship is employee or contractor, is a fact based exercise. Simply signing a contract and saying it is a contractor is not enough. A brilliant article written by Maroof H. Sabri provides a basic...