1. LAWYERS: “TO INCORPORATE OR NOT TO INCORPORATE, THAT IS THE QUESTION”

2. PCs - Shareholders  Limitation on who the shareholders can be  Tax planning opportunities and structures available depend on province and profession at issue  Medical or dental PCs permit non-voting participating shares  Legal PCs? Only lawyers can be shareholders in Ontario  No income splitting ability 

3. PCs – THE PROs  Small Business Deduction  Favourable tax rate for active business income  15.5% tax rate in Ontario for on first $500,000 of income; Income over $500,000 is taxed at 26.5%  Compare to top personal marginal rate of 46.41% on first $500,000 and 49.53% on income above $500,000 (Ontario)  Deferral of Tax to the extent you leave it in the corporation  Remunerations?  Salary or Bonus: Payment is deductible to corporation and included in your hands at your marginal tax rate  Likely subject to withholding tax at source, CPP and EI deductions  Can maximize RRSP contribution  Dividends – tax at dividend rate in your hands  RDTOH recovery  No source deductions for taxes, CPP, EI  Employer Health Tax may be avoided  Capital Gains Exemption  Shares of PCs eligible for lifetime CGE of $800,000  But if value in business lies with individual goodwill rather than in PC, may not be useful

4. PCs – THE CONs  Cost and time commitments to incorporate  Professional fees such as legal and accounting for planning, filing of corporate tax returns, T4s/T5s, etc.  Complexity to administration of professional’s practice  Requirement to maintain the corporation and require more detailed and complete records