When two incorporated businesses are associated (related) for tax purposes, they must share the small business limit. Similarly, when a CCPC is a member of a partnership, the CCPC is only entitled to its proportional share of the SBD, based on its share of active business income of the partnership allocated to it. For instance, assume there are five professional corporations that are members of a partnership. The partnership has active income of $1 million for a tax year. If Corporation ABC Ontario Inc is allocated 20% of the active income of the partnership ($200,000), at most $100,000 of that income (20% of the $500,000 SBD) can be classified under the SBD.
SA Accounting Solutions is a Professional Corporation registered with Chartered Professional Accountants of Toronto, Ontario. We are a full service public accounting practice dedicated to working with the Accounting and Tax issues of small to mid-size enterprises (SMEs). Our services include Assurance, Accounting & Compliances, Asset Protection and Trust Planning, Tax Planning, Bookkeeping & Payroll, SR&ED, Outsourcing Controllership and Internal Controls and Incorporation & Business Plans. Please call us at 416 824 6950, email us at firstname.lastname@example.org or visit our website www.saaccountingsolutions.com to book your one hour free consultation if you need help with incorporation.