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This blog article on PSB outlines the rules clearly. But in one of the comments it says:

However, if you are paying mostly salary to yourself, your risk is minimal even if assessed

What is the reason for this? I ask because this is more of a corollary than the actual terms and conditions of the PSB.

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PSB taxed at higher rates. PSB is taxed at 39.5% in Ontario, as the article mentioned. But if you pay all the net income to yourself as salary, you expense it and zero it out on the corporate level. So who cares what tax rate it is if the taxable income is zero? No-one.

Same goes for the US, by the way. Personal Service Corporations are taxed at flat 35% Federal tax rate. But if you pour all the income into your salary - its moot, because there's no net income to pay tax of.

If it's too complicated to figure out, maybe it would be wise to hire a tax accountant to provide counsel to you before you make decisions about your business.

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