The Business Corporations Act (Ontario) (“OBCA”) allows members of certain professions to incorporate a professional corporation. These professions include: [OBCA s. 3.1(2)(b)]
- A profession named in Schedule 1 of the Regulated Health Professions Act, 1991
- Chartered Professional Accountants, governed by the Chartered Professional Accountants of Ontario Act, 2017
- Lawyers and paralegals, governed by the Law Society Act
- Social workers, governed by the Social Work and Social Service Work Act, 1998
- Veterinarians, governed by the Veterinarians Act
Schedule 1 of the Regulated Health Professions Act, 1991 contains the following professions:
- Audiology and Speech-Language Pathology; Chiropody; Chiropractic; Dental Hygiene; Dental Technology; Dentistry; Denturism; Dietetics; Homeopathy; Kinesiology; Massage Therapy; Medical Laboratory Technology; Medical Radiation and Imaging Technology; Medicine; Midwifery; Naturopathy; Nursing; Occupational Therapy; Opticianry; Optometry; Pharmacy; Physiotherapy; Psychology; Psychotherapy; Respiratory Therapy; Traditional Chinese Medicine.
Members of other professions not specifically referred to in the OBCA may also practice through a professional corporation if the statute that governs that profession expressly permits the practice of the profession by a corporation. [OBCA s. 3.1(2)(a)] Examples of such professions include architects and engineers.
Professional corporations generally do not limit the professional liability of a shareholder for acts of the shareholder or employees of the corporation [OBCA s. 3.4(1)].
One of the primary reasons for using a professional corporation is to benefit from lower corporate income tax rates, compared to higher tax rates when earning income personally. The tax rate will be reduced further if the income earned in the corporation is eligible for the small business deduction.
From October 1, 2020, real estate salespeople and brokers governed by the Real Estate and Business Brokers Act, 2002, are allowed to earn income through a corporation. Sometimes called “Personal Real Estate Corporations”, these are not technically professional corporations for the purposes of the OBCA, and are subject to different rules and requirements set out in Ontario Regulation 536/20 under the Real Estate and Business Brokers Act, 2002.