The Canada Revenue Agency (CRA) is continuing to analyze the business practices of personal services businesses (PSB) through its PSB pilot project. The information gathered will help the CRA identify future outreach and education opportunities, as well as plan enforcement measures.
We’re here to help
The PSB pilot is an ongoing phased approach to compliance that focuses on educating taxpayers and business owners on the tax obligations associated with operating a PSB for tax purposes.
The second phase of the pilot, which began in October 2023, is focusing on identifying potential PSBs. If you are contacted as a potential PSB, we encourage you to participate. This is your opportunity to share your feedback on your tax obligations and to make sure you are meeting them.
As part of the CRA’s PSB education efforts, we have developed a fact sheet that defines a PSB and outlines what you need to know if you’re operating as one.
What’s in the fact sheet
The fact sheet outlines the reporting and filing obligations for PSBs, which include:
- filing a Corporation Income Tax Return, as well as an individual Income Tax and Benefit Return (for the incorporated employee of the PSB);
- issuing T4A slips for amounts paid by one corporation for services provided by another corporation;
- filing GST/HST returns; and
- providing accurate T4 statements to any employees of the corporation.
The fact sheet also highlights the tax rates PSBs are subject to, as well as what PSBs are not eligible to deduct and claim, such as the small business deduction and the general tax rate reduction.
Need more information?
Not sure if you are a PSB? Information to help you determine if your business is a PSB, and the tax implications if you are operating a PSB, can be found at canada.ca/personal-services-business.
To learn more about the PSB pilot, visit canada.ca/personal-services-business-pilot.
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