What the PREC actually changes
Before 2020, an Ontario real estate registrant had to be paid personally: commissions landed on a personal tax return at personal rates. The Trust in Real Estate Services Act, 2002 and Ontario Regulation 536/20 changed that by letting a registrant be paid through a Personal Real Estate Corporation. Income earned in the corporation is taxed at corporate rates first, and money you do not need to live on can stay in the corporation, which is where the planning value comes from: deferral, timing of personal income, and, with proper advice, opportunities around how family members participate.
What it costs you in flexibility
The trade is strict structure. An ordinary corporation can have any shareholders, any board, any business. A PREC cannot. The controlling registrant must own all of the equity, be the sole director, and be the president and only officer. Non-equity shares are limited to family. The corporation’s business is limited to providing the registrant’s services, with remuneration flowing through the brokerage; it is not a vehicle for holding rentals, running a property management arm, or trading on its own account. If you want the corporation to do those things, that is a different corporation, and mixing the two is precisely how PRECs get into trouble.
The decision is a math problem plus a discipline problem
Whether a PREC earns its keep depends mostly on how much of your commission income you can leave in the corporation. A registrant who spends everything they earn gains little from deferral, while one who can leave six figures inside the corporation each year has real planning room. Weigh against that the running costs: a corporate year end, a T2, payroll or dividend administration, and the one-time cost of setting the structure up properly. That arithmetic is a conversation with your CPA. The discipline problem is keeping the corporation inside its conditions once it exists, because the savings all assume the structure qualifies.
If you go ahead, the articles are where it starts
The conditions above are not just facts about behaviour; several reach into how the articles of incorporation are drafted. General-purpose incorporation defaults, unlimited business, flexible boards, standard share classes, work against them. Incorporating a new PREC properly is a $2,000 CAD flat engagement with us plus the government’s own filing fee, or your own lawyer can draft it; either way, the drafting deserves deliberate attention rather than a template. And if you already hold a corporation you believe is a PREC, the fastest reality check is reading its articles against the rules.
Not advice, and deliberately so
Whether a PREC is right for you depends on your income, your spending, your family, and your plans, none of which a web page knows. Treat this as the map, and your CPA and lawyer as the guides. Not legal or tax advice.