This morning, CRA released the results from Phase 1 of its PSB pilot project that ended in December of 2022. Some notes:
Of the 2,100 corporations that participated, just over 10% were likely to be utilizing PSBs.
64% of potential PSBs were incorrectly claiming the small business deduction (SBD)., which they are not eligible for as a PSB. This would have resulted in an average of $16,711 more in corporate tax.
Nearly 74% of the potential PSBs identified work in 3 sectors/industries:
Transportation and warehousing (35%),
Professional, scientific and technical services (26%), and
Construction (13%).
Phase 1 focused on entities engaging PSBs. Phase 2, running from October 2023 to June 2024, will target PSBs directly. The review will examine the 2022 tax year. The purpose of the phase is to gather more information and provide education. Phase three (no timeline set) will continue to focus on education but will also include assisted compliance.
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