Incorporate a Personal Real Estate Corporation in Ontario for $35
Start your personal real estate corporation for $35, HST included. Government fees are separate. Complete the intake form and a CPA reviews your name and share classes before we file.
A personal real estate corporation receives no certificate of authorization and is not itself registered under the Trust in Real Estate Services Act, 2020. You remain the registrant, and the corporation is exempt from registration only while it meets every condition in Ontario Regulation 536/20, including your own legal name in the corporate name and equity shares held by you alone.
Our fee to prepare and file the articles is $35.00, HST included, and government charges ride through at cost. Open Corporation for $35 is a department of Gondaliya CPA. A Chartered Professional Accountant reviews those share classes at the start.
Why Real Estate Agents Incorporate a PREC
Active business income within the $500,000 federal business limit is taxed at 9% federally and 3.2% in Ontario, a combined 12.2%. Against a top Ontario personal rate of 53.53%, an agent keeps roughly 41 cents more per dollar working until it is drawn out.
That is a deferral, not a permanent saving, and it matters because commission is lumpy. Two closings in December push a sole proprietor into the top bracket for an otherwise ordinary year.
Team building is the second reason. Buyer’s agents, an administrator, photography and desk fees are paid before the deal closes, and a corporation funds them with 12.2% dollars.
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PREC Rules Under TRESA and Ontario Regulation 536/20
The regulator is the Real Estate Council of Ontario (RECO), which enforces the Trust in Real Estate Services Act, 2020 (TRESA), formerly the Real Estate and Business Brokers Act, 2002.
Typical Share Structure for a PREC
| Share class | Who holds it | Voting | Dividend entitlement | Why it is there |
|---|---|---|---|---|
| Class A common, equity | The RECO registrant | Yes | Discretionary | Control. Only the controlling shareholder may hold equity shares |
| Class B common, non-equity | Spouse of the registrant | No | Discretionary | Permitted family shares, used where TOSI allows |
| Class C common, non-equity | Adult children or parents | No | Discretionary | Permitted family shares, often used across tuition years |
| Class D common, non-equity | Trust for minor children | No | Discretionary | Holds shares for children under 18 |
| Class E preferred | The registrant | No | Fixed, redeemable | Freezes accrued value, or consideration on a section 85 rollover |
Section 120.4 of the Income Tax Act decides whether the family classes do anything. The excluded shares exception is unavailable to a spouse holding non-voting shares, because it requires 10% of votes and value, and a services business fails it anyway.
Two routes remain. A spouse who works an average of 20 hours a week meets the excluded business test, and where the registrant has reached 65, dividends to a spouse generally fall outside the rules. Otherwise a CPA prices salary instead, deductible under section 67 where hours and rate are documented. The classes still go in the articles now, since adding one later costs an amendment.
HST for Real Estate Agents
Commission is a taxable supply. The exemptions in Schedule V to the Excise Tax Act cover the sale of used residential housing, not the service you provide in arranging it, so commission carries 13% in Ontario.
Common CRA Issues for Real Estate Agents
Vehicle expenses with no mileage log
Triggered by fuel, insurance and lease payments claimed with nothing to support the business proportion. The CRA reduces the claim to what can be proved, and subsection 15(1) applies to the personal share.
Standby charge on a corporation-owned car
Triggered by putting the vehicle inside the PREC and driving it personally, which adds a benefit under paragraphs 6(1)(e) and 6(1)(k) often exceeding the deduction.
HST under-remitted on gross commission
Triggered by recording the brokerage deposit as revenue without separating the tax, or by collecting commission before the RT account is open.
Split dividends reassessed under TOSI
Triggered by dividends to a spouse or adult child who does not work in the business, taxed at the top marginal rate under section 120.4 of the Income Tax Act.
Promotion and entertainment claimed in full
Triggered by client dinners, closing gifts and open house catering, which section 67.1 of the Income Tax Act limits to 50%.
First-Year Compliance Calendar
| When | What is due | Who files it | What happens if it is late |
|---|---|---|---|
| Day 1 | Articles of incorporation, Business Corporations Act (Ontario) | Us, through the Ontario Business Registry | No corporation exists, so the brokerage cannot pay a PREC |
| Within 60 days of incorporation | Initial Return, Corporations Information Act | Us, through the Ontario Business Registry | Penalties under that Act. No filing fee |
| Week 1 to 2 | Business number and RC0001 corporate tax account | Your CPA, with the CRA | Nothing to file the T2 against |
| Before the first commission | Brokerage agreement and notification to RECO | The registrant, to RECO | The O. Reg. 536/20 exemption may fail |
| Before the first commission | HST registration and RT account | Your CPA, with the CRA | Unremitted tax on commission earned, plus interest |
| Within 53 weeks of incorporation | First fiscal year end chosen | Your CPA | It is difficult to change afterwards |
| 15th of the following month | Payroll source deductions on salary and staff | The corporation, to the CRA | Penalty of 3% to 10%, and 20% on a repeat failure |
| One month after each quarter end | First HST return, quarterly filer | Your CPA, with the CRA | Late filing and instalment interest |
| 6 months after year end | T2 corporate income tax return | Your CPA, with the CRA | Late filing penalty on unpaid tax |
| 6 months after year end | Ontario Annual Return, Corporations Information Act | Us or your CPA, through the Ontario Business Registry | Non-compliance, and eventual cancellation. No filing fee |
| First tax year | No corporate instalments required | CRA rule, nothing to file | Instalments begin in year two once tax owing passes $3,000 |
| Ongoing | Your own RECO registration renewal | The registrant, to RECO | You may not trade. The PREC does not renew, because it is not registered |
A personal real estate corporation is built to one specification, so we test eligibility before anything else.
Eligibility
You must be registered with RECO as a broker or salesperson, and you must be the controlling shareholder owning all the equity voting shares legally and beneficially.
Family shareholdings
Ontario Regulation 536/20 permits a spouse, child or parent to hold non-equity shares. Whether the dividends are useful is decided under section 120.4, and a dividend to a family member who does not work in the business is taxed at the top marginal rate.
HST registration
Effectively immediate. One firm deal clears $30,000, and tax on desk fees, board dues and marketing is only recoverable from the effective registration date.
The year end
Set against your commission cycle so the first T2 does not land on top of a spring market.
Passive investment
Passive income above $50,000 grinds the $500,000 business limit, which usually decides whether a rental property sits in a separate company rather than the PREC.
Salary, vehicle and rollover
Salary against dividends, whether the vehicle belongs inside the corporation once the standby charge is counted, and whether a section 85 election is needed to move an existing practice across.
Fees to Incorporate a PREC in Ontario
Our fee is $35.00 with HST included. Every government fee is passed through at cost as its own line. A PREC must be a named company, so the NUANS report is always required.
| Item | Amount | HST | Total | Who charges it |
|---|---|---|---|---|
| Incorporation preparation and filing | $35.00 | Included | $35.00 | Open Corporation for $35 |
| Ontario articles of incorporation, filed online | $300.00 | None | $300.00 | Ontario Business Registry |
| Ontario-biased NUANS name search report | $25.00 | Included | $25.00 | Open Corporation for $35 |
| Initial Return, Corporations Information Act | $0.00 | None | $0.00 | Ontario Business Registry |
| Annual Return, Corporations Information Act | $0.00 | None | $0.00 | Ontario Business Registry |
| Minute book, bookkeeping, payroll, HST and T2 | Quoted on request | Gondaliya CPA | ||
| Total to incorporate your PREC | $360.00 ($300.00 government filing + $25.00 NUANS + $35.00 our fee) | One-time | ||
The Bundle for Real Estate Agents
After incorporation the ongoing accounting moves to the parent firm. Gondaliya CPA books commission from the brokerage statements rather than the bank deposits, separates the HST on gross commission from the split, keeps mileage records to a standard that holds up, files the HST returns, runs payroll, prepares the T2 and the Ontario Annual Return, and sets the salary and dividend mix.
Why Real Estate Agents Use Us
Gondaliya CPA Professional Corporation is registered with CPA Ontario under firm registration number 61330051. Open Corporation for $35 is a department of Gondaliya CPA.
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The CPAs Who Review Your PREC
A Chartered Professional Accountant reviews your name and share classes before anything is filed.
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Personal Real Estate Corporation FAQs
Can a real estate agent incorporate in Ontario?
Does a PREC have to be registered with RECO?
Who can own shares in a personal real estate corporation?
Can I pay my spouse dividends from my PREC?
Do real estate agents charge HST in Ontario?
Can a PREC use the HST quick method?
What must a personal real estate corporation be called?
How much tax does a PREC pay?
Related Industries We Serve
Real Estate Brokerages
- Trust account reconciliation
- Agent commission payouts
- HST on brokerage revenue
Mortgage Agents and Brokers
- Exempt financial service rules
- Commission and trailer income
- FSRA licensing costs
Property Managers
- HST on management fees
- Owner trust ledgers
- Staff payroll
Real Estate Investors
- Holding company for rentals
- Passive income and the grind
- Capital cost allowance on buildings
A PREC Your Brokerage Can Pay
One form stands between you and a PREC your brokerage can pay. Pay $35 including HST, and a CPA checks the equity shares, the family classes, the name and the year end first.
No legal advice. Gondaliya CPA Professional Corporation is a firm of Chartered Professional Accountants licensed by CPA Ontario, firm registration number 61330051. It is not a law firm. We prepare and file corporate documents and we provide accounting and tax advice. Nothing on this page is legal advice, and reading it creates no solicitor and client relationship. For legal advice, including advice on a shareholder agreement before you sign it, consult a lawyer licensed in the province where your corporation carries on business.
