The Ontario Real Estate Association (OREA) says it is happy to see the re-introduction of legislation intended to bring fairness to the tax treatment of Ontario Realtors.
Introduced by Prince Edward – Hastings MPP Todd Smith, the Tax Fairness for Realtors Act, 2015 will allow real estate salespeople to use personal corporations. The bill is being co-sponsored by Liberal MPP Mike Colle (Eglinton-Lawrence). Previously introduced in the last term, the bill died when last year’s provincial election was called.
The Real Estate and Business Brokers Act, 2002 (REBBA), prevents real estate salespeople from operating their business through a personal real estate corporation (PREC).
“This is fantastic news for Ontario’s real estate professionals,” said Costa Poulopoulos, president of OREA. “Most other provinces allow Realtors to form personal corporations. It’s time for Ontario to do the same. It is encouraging to see members of the government and opposition parties supporting this legislation and we look forward to the bill being debated.”
OREA says PRECs will not cost the provincial treasury revenue and will produce a modest economic benefit. A recent study by the Centre for Spatial Economics (C4SE), found that PRECs would have a positive impact on provincial tax revenue and the economy. It says PRECs would create between 33 to 89 net new jobs annually; increase provincial tax revenue by an annual average of $0.8 million to $2 million; and contribute between $9 to $25 million annually to Ontario’s GDP.
The ability to incorporate would allow a Realtor, depending on their level of business income, to save money on their income tax by taking advantage of the lower corporate tax rate. Money saved on taxable income is typically reinvested in the corporation, says OREA.
