The Ontario Real Estate Association (OREA) applauds the introduction of new legislation which will bring fairness to the tax treatment of Ontario Realtors.
Introduced by Prince Edward--Hastings MPP Todd Smith, the Tax Fairness for Realtors Act, 2014 will allow real estate salespeople to form personal corporations. 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 real estate professionals,” said Costa Poulopoulos, president of OREA. “Most professions in Ontario can form personal corporations. This is an important step towards treating Ontario Realtors fairly.”
Other regulated professions in Ontario, including chartered accountants, lawyers, health professionals, social workers, mortgage brokers, insurance agents, architects and engineers, can all form personal corporations. Since 2008, British Columbia, Québec, Manitoba, Saskatchewan, Alberta and Nova Scotia have moved to allow real estate salespeople to incorporate.
“Most other provinces allow Realtors to form personal corporations,” said Poulopoulos. “It’s time for Ontario to do the same.”
PRECs will also help grow Ontario’s economy. 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. Specifically, C4SE’s report found that PRECs:
- Would create between 33-89 net new jobs annually;
- Increase provincial tax revenue by an annual average of $0.8 million to $2 million; and,
- Would contribute between $9 to $25 million annually to Ontario’s GDP.
“Personal real estate corporations will pay for themselves, create jobs and help grow Ontario’s economy,” said Poulopoulos.
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.
About OREA: The Ontario Real Estate Association represents over 58, 000 brokers and salespeople who are members of the province’s 40 real estate boards. OREA serves its members through a wide variety of publications, educations programs and special services. The association provides all real estate licensing courses in Ontario.