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Hello Allan,
We are moving to Halifax, Nova Scotia and I want to continue as Independent Consultant as I have been doing in India. What are the tax implications for Independent Contractor as Proprietor in Canada? Are there better options than proprietorship? (In India, there is an advantage, if I have gross income below a threshold, I can pay tax on 50% of the gross income and need not keep records, P&L etc.)
Thanks for your help and insightful vlogs on youtube.
regards.
Consider incorporating a Canadian company to bill your clients. Canadian controlled private corporations pay a low rate of corporate income tax (approximately 13% on the first $500,000 of taxable business profits). Furthermore, Canadian corporations can claim various tax deductions for business expenses. Finally, pay yourself a salary or a dividend from your corporation so that you have a personal income to support yourself and your family.
Note that there is no exclusion of income for Canadian companies, which is the opposite of the tax rules in India. In addition, you should be aware of the personal service business rules. If you have a single client, do not pay for any expenses, and do not supply the tools or equipment necessary for your business, then your business may be classified as a Personal Services Business (PSB). The profits from a PSB are subject to a corporate income tax rate of over 50%.