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The biggest advantage of incorporating a small business (generally known as CCPC) is that it qualifies for a lower tax rate. However, if you control more than one corporation, beware that reduced tax rates will apply to the first $500,000 income from all corporations collectively under your control (associated corporation) as per the CRA’s rules.

Therefore, it is critical to understand tax implications if you become a shareholder in multiple corporations, especially with your family members.