Offices in Ottawa and Perth
(613) 722-1500

CONTACT US (613) 722-1500

Incorporation for Real Estate Agents (updated July 8, 2020)

Incorporation for Real Estate Agents (updated July 8, 2020)


Mann Lawyers

Posted January 22, 2020

In an effort to “create a stronger business environment”, the Ontario government passed Bill 145, the Trust in Real Estate Services Act, in March 2020, which amended the Real Estate and Business Brokers Act to allow real estate professionals to incorporate and, therefore, benefit from lower tax rates, tax deferrals, income splitting opportunities and transfers of assets.

Lower tax rates

Real estate professionals were previously taxed on all self-employed income at personal tax rates, which are typically higher than corporate rates, leaving fewer available resources for things like advertising, hiring employees and investing.

Now, real estate professionals in Ontario who incorporate can take advantage of the Small Business Deduction, which allows up to $500,000.00 of active business income to be taxed at the corporate rate of 3.2% for 2020. Income in excess of the small business limit would be taxed at the general corporate rate of 11.5%. In contrast, the highest personal tax rate is 53.53%. (Note: There are limitations to accessing the small business deduction when a business earns passive income (i.e. from investments) in excess of $50,000.00 in its prior year.)

Tax Deferrals

Incorporated real estate agents would only be taxed personally for the money paid out from the corporation, such as on dividends (where the corporation could then take advantage of the dividend tax credit) and on salaries (the payment of which would reduce the corporation’s income tax).

Opportunities for income splitting

A corporation can pay a reasonable salary to employed family members for services provided, which would be a deductible expense for the corporation. Family members may also become shareholders of the corporation, subject to tax rules.

Transfer of assets

Any asset that a real estate agent owns personally can be transferred into their corporation, and funds can be withdrawn from the corporation tax-free up to a certain amount as a result of the transfer.

Incorporation comes with a variety of potential benefits, but it is important to be aware of the extra compliance requirements and administrative costs that come with incorporating such as filing a separate tax return for the corporation; maintaining accounting records and producing annual financial statements (which means potentially hiring an accountant); payroll remittances and Employer Health Tax and Workplace Safety and Insurance Board requirements for any employees; as well as legal costs associated with incorporating, preparing annual minutes and other filings required by the Business Corporations Act (Ontario).

Regulations supporting the Trust in Real Estate Services Act have not yet been released. Further details can be found by visiting the news section of the Ontario Government or by viewing the bill from the Legislative Assembly of Ontario.

This blog post was written by Jade Renaud,  a member of the Business Law team.  Jade can be reached at 613-369-0373 or at




















More Resources

Blog |
Employment, Labour, and Human Rights, Commercial Litigation


Posted May 23, 2023

Both in my commercial and employment litigation practice, I encounter Ontario business owners faced with serious charges laid against them under the Provincial Offences Act[...]
Blog |
Family Law


Posted May 18, 2023

The recent Supreme Court of Canada decision in Anderson v. Anderson, 2023 SCC 13, provides guidance on domestic contracts and the enforceability of an informal[...]
Blog |
Environmental Law


Posted May 16, 2023

When many people think of contaminated sites, they think of the usual suspects such as industrial properties and gas stations.  They may not think of[...]
Blog |
Business Law


Posted May 9, 2023

Often business owners reach a point where they are considering the sale of their business either through the sale of shares or the sale of[...]
Blog |
Family Law


Posted May 2, 2023

Overview of Tort Claims in Family Matters Tort claims can be made in family law matters, so as to prevent a multiplicity of proceedings and[...]
Blog |
Employment, Labour, and Human Rights


Posted April 25, 2023

In a case that recently was decided from the Court of Appeal of Ontario called Celestini v Shoplogix Inc., 2023 ONCA 131, the Court had[...]

Subscribe to Our Newsletter

"*" indicates required fields

This field is for validation purposes and should be left unchanged.