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Real Estate incorporation:

Getting ready for Bill 145


As we get closer to Bill 145 receiving final proclamation, we'd like to explore how this can impact and ultimately benefit those in Ontario.

The bill amends the Real Estate & Business Brokers Act, 2002 (REBBA), amongst other changes enabling real estate professionals to form corporations known as personal real estate corporations (PRECs). We'd like to take this opportunity to highlight the value for real estate agents—from understanding the process that's to be expected, knowing how to benefit from the potential tax savings, and presenting other strategic business-planning options.

The first step is to start the conversation.

Why now?

When it comes to professional services, starting the conversation with our team of advisors well before Bill 145 and related legislation gets passed opens up the discussion on how to structure future tax planning, as well as what options for business growth look like moving forward.

Incorporating can be beneficial in a number of ways; with potential savings whether we're talking on a short, medium or long-term basis.

Waiting for the law to pass to start this conversation could waste tax dollars. Having answers ready to go beforehand allows you to properly structure as soon as possible—shielding some of your hard-earned commissions from personal taxes. Real estate professionals know that timing is everything—so it's important to be there first.

How can this conversation benefit you?

A professional consultation that's more strategic in nature takes the current dynamic of just dropping off a folder of documents every year to the next level. Whether it's smoothing income year-over-year to assist with sales variances between years, exploring the possibility of income splitting with your spouse, or another concern you may have; we're here to assess and advise on these options with you. The more ambitious your plans to grow, the more options you have at your disposal.

You can have peace of mind in the professional and industry expertise, service, and advice our team offers. Administrative work can be a nuisance—sorting out how and when commissions are getting paid, how the brokerage is tracking those commissions and withholding HST, how your taxes are being calculated and staying compliant with the CRA, and what expenses can be claimed and deducted, among others.

Your focus is better spent on building your business, as ours is on streamlining and accelerating its growth with you.

The top benefit for incorporating is the tax savings for high-income agents. Paying lower tax rates and retaining income as a result becomes more advantageous with higher sales volumes.

It's also a great way to accumulate wealth at a more accelerated pace and save for retirement. Benefits can look different depending on what future goals look like, both short- and long-term.

BDO is here to help

Let's have the conversation. Then, when the time comes, we can help implement the right solution for you. And if incorporating is not the way to go, we can help you tackle business activities from a legal, income tax, bookkeeping, and GST perspective. We're happy to offer tax, estate and business planning, or whatever else makes sense for you.

No matter what you envision for the future, now's the time to start thinking about all the potential moves for when the time is right. We have over 65 offices across Ontario and a team of industry professionals to help you manage and grow your real estate business. Our team would be happy to chat.

The information in this publication is current as of March 3, 2020

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

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