PSB Status: Tax Risks for Truckers and Trades
CRA can classify your incorporated business as a Personal Services Business if you're essentially operating as an "incorporated employee."
- PSB status means losing corporate tax benefits
- Taxed at highest personal rates, not small business rates
- Common risk for truckers and tradespeople with few clients
- Structure your business to avoid PSB classification
What is a Personal Services Business?
A Personal Services Business (PSB) is a corporation where the owner would be considered an employee of the client if not for the corporate structure. PSBs face severe tax penalties.
Tax Consequences
PSBs are taxed at the general corporate rate of ~33% instead of the small business rate of ~12%.
Can only deduct salary to shareholders, legal/accounting fees related to collecting income.
High-Risk Industries
- Owner-operator truckers with one dispatch company
- Tradespeople working exclusively for one contractor
- IT consultants with single long-term clients
Single client, client controls work details, no risk of profit/loss, cannot hire helpers—these factors trigger PSB classification.
Have multiple clients, own your equipment, control your schedule, assume financial risk, hire helpers when needed.
Concerned About PSB Status?
Tax Punjabi can help you structure your business to avoid PSB classification.