CA4IT has been offering professional representation to IT professionals and independent contractors who need help with winning cases against PSB risk.
When many accounting firms avoided dealing with IT professionals, CA4IT ensured that the tax rights of the incorporation were rightly fought for. Many of you might be wondering what PSB is? – Under the CRA’s definition, this refers to a personal service business where an individual works for one employer but remains incorporated. PSB risk is one of the greatest tax threats facing independent consultants and contractors.
The Canada Revenue Agency has been working towards going after IT consulting companies and considering them a PSB. When an IT consultant incorporates their own company and begins working for their client; they could benefit from a large variety of tax benefits. Some of the income tax advantages of being an incorporated independent include lower corporate taxes, business expense deductions and income splitting with family members. Once the CRA considers your firm as a PSB, you will potentially lose these benefits and face possible reassessment of your tax file.
Understanding the risks of being declared a PSB is extremely important for IT professional and independent contractors. The CRA loses billions of dollars every year in lost income taxes, simply because employees begin their own corporation. There are PSB tax rules that now prevent independent contractors from tax benefits such as income splitting, business expense deductions and the low corporate tax rate. If you are deemed to be a PSB; reassessment could end up costing well into the thousands of dollars.
When would one be considered a PSB? – The CRA would consider one to be a PSB when they’re seen as an employee of another company to whom they are providing services in an employer-employee relationship and for the purpose of the existence of the created corporation. CA4IT specializes in helping independent contractors with minimizing the risk of being considered a personal service business. There are several steps you can take in protecting your business and financial security without having to deal with a possible CRA audit.
CA4IT has helped numerous independent consultants win cases against the CRA
The CRA has lost numerous PSB cases in the past, so incorporated professionals can survive in the business and benefit from the tax advantages. All this starts with having proper tax representation by a qualified firm, such as CA4IT.