A Personal Real Estate Corporation (PREC) lets a RECO-registered salesperson or broker in Ontario have commissions paid to a corporation instead of personally. On the first $500,000 of qualifying active business income, the combined federal and Ontario small business rate is about 11.2% from July 1, 2026 (it was 12.2% before that date). Earned personally, the same income can face marginal rates as high as 53.53%.
The saving is really a deferral: you pay the lower corporate rate on money you leave inside the PREC, and personal tax when you take it out. Setup is not complicated, but the order matters. Below are the six steps most Ontario agents follow. If you want the full background on rates, TRESA rules and a worked tax example first, read our complete PREC guide for Ontario 2026–2027.
The 6 steps at a glance
| Step | What you do | Why it matters |
|---|---|---|
| 1 | Confirm you qualify under TRESA | Only an active RECO registrant can control a PREC |
| 2 | Incorporate with a compliant share structure | Voting control must sit with you alone |
| 3 | Notify RECO and sign the brokerage agreement | The brokerage cannot pay the PREC until this is done |
| 4 | Open a corporate bank account and set up books | Keeps corporate and personal money separate |
| 5 | Register CRA program accounts | Corporate tax, HST and payroll as needed |
| 6 | Set your pay mix and compliance calendar | Decides how much tax you defer and when |
Step 1: Confirm you are eligible
Under the Trust in Real Estate Services Act, 2002 (TRESA) and Ontario Regulation 536/20, you must be an actively registered salesperson or broker with RECO.
- You, the controlling registrant, must be the sole director and officer and hold all of the voting shares.
- Family members (spouse, parents, children) may hold non-voting shares, directly or through a family trust where they are the beneficiaries.
- Two agents cannot share one PREC. Each agent needs a separate corporation.
- Your brokerage is not required to agree to a PREC, so check with your broker of record before you incorporate.
Step 2: Incorporate under Ontario's Business Corporations Act
File articles of incorporation through the Ontario Business Registry. The government filing fee is $300 online. A named corporation also needs a NUANS name search report; a numbered company does not. The name must follow RECO's rules and must not suggest that the corporation itself trades in real estate.
A typical PREC share structure looks like this:
| Share class | Who holds it | Purpose |
|---|---|---|
| Voting common shares | You, 100% | Keeps control with the registrant, as TRESA requires |
| Non-voting shares (one or more classes) | Spouse, parents, children or a family trust | Flexibility for future family planning |
| Preferred shares (optional) | You | Can be used later for an estate freeze |
Have an accountant check the tax on split income (TOSI) rules before issuing shares to family. Most dividends paid to a spouse who does not work in the business about 20 hours a week are taxed at the top rate. Our business incorporation and registration professionals can handle the filing and minute book.
Step 3: Notify RECO and update your brokerage agreement
A qualifying PREC does not register with RECO, but you must notify RECO of the corporation and confirm it meets the TRESA conditions before it is paid. You stay personally registered and personally responsible for your regulated activity.
Next, you, the PREC and your brokerage sign a written agreement that directs your commissions to the PREC. Brokerages usually ask for:
- the certificate of incorporation
- the PREC's legal name and business number
- a letter confirming the corporation meets the TRESA requirements
Some brokerages also add their own indemnity wording. If you later change brokerages, you need a new agreement and a new notice to RECO.
Step 4: Open a corporate bank account and set up bookkeeping
Open a business bank account in the PREC's name. The bank will want the certificate of incorporation, a directors' resolution naming who can sign, and the business number. Commissions must be paid straight into this account. Money that lands in your personal account first can be treated as your personal income, which defeats the purpose.
Set up cloud accounting software such as QuickBooks Online or Xero with a chart of accounts suited to a professional services corporation, then run a simple monthly routine:
- reconcile the bank account
- track HST collected and paid
- monitor the shareholder loan account, so personal withdrawals are recorded properly
Listed bookkeeping services professionals can run this for you each month.
Step 5: Register your CRA program accounts
| CRA account | When you need it |
|---|---|
| Business number (BN) and RC corporate income tax | Always, usually created when you incorporate |
| RT (GST/HST) | Once taxable commissions pass $30,000 over four consecutive calendar quarters. Registering earlier is allowed and lets you claim input tax credits |
| RP (payroll) | Only if you plan to pay yourself, or a family member, a salary |
Only open the accounts you will actually use. An open payroll account, for example, comes with filing obligations even if you pay dividends only. See GST/HST filing and payroll services for help with each.
Step 6: Set your pay mix and compliance calendar
Decide with your accountant how you will take money out of the PREC:
- Salary creates RRSP room and CPP contributions and is deductible to the PREC, but it needs payroll remittances.
- Dividends are simpler to pay, but they create no RRSP room and are not deductible to the corporation.
Model both against what your household actually needs to spend and your retirement plans. The bigger the gap between what you earn and what you withdraw, the more the PREC is worth. Our salary or dividend guide walks through the trade-off.
Then put these deadlines in your calendar:
| Deadline | Timing |
|---|---|
| T2 corporate return | Six months after the fiscal year-end |
| Corporate tax balance | Usually two months after year-end, or three if the PREC qualifies |
| Ontario annual return | Filed each year with the T2 |
| HST returns | Monthly, quarterly or annually, depending on revenue |
| T4 or T5 slips and your personal T1 | After each calendar year, by the CRA deadlines |
| Minute book | Updated yearly with resolutions and dividend declarations |
| RECO | Notify RECO in writing within five days of any change to your PREC information |
See T2 filing deadlines and penalties for what happens if a date is missed.
Common setup mistakes
- Letting your RECO registration lapse. The PREC can only receive commission while you remain a registered salesperson or broker.
- Giving voting control or equity to a spouse. Voting shares must stay 100% with the registrant. A structure that hands control to someone else does not qualify.
- Commissions paid to you instead of the PREC. The brokerage must pay the PREC's bank account directly.
- Incorporating before the brokerage agrees. You may end up with a corporation that cannot be paid.
- Counting the deferral as a permanent saving. Tax is due when money comes out, so the benefit depends on how much you can leave inside.
A quick example
Say an agent nets $350,000 of commission after expenses but only needs $200,000 a year to live on. The extra $150,000 left inside the PREC is taxed at about 11.2%, roughly $16,800, instead of at personal marginal rates, which would take about $77,800. That is roughly $61,000 of tax deferred in a single year, which can stay invested inside the corporation until it is paid out. The detailed numbers are in our full PREC guide.
Get help setting up your PREC
Good Accounting is a marketing platform that connects Ontario realtors with listed accounting professionals. We are not an accounting firm, so the professional you engage provides the work and quotes the fee. Start with our accountants for real estate agents, or find local help in Toronto, Mississauga or Brampton.
PREC setup FAQ
Can two realtors share one PREC in Ontario?
No. Under TRESA and Ontario Regulation 536/20, each PREC has a single controlling registrant who is the sole director and holds all the voting shares. Two agents each need their own PREC.
Can my spouse own shares in my PREC?
Yes, but only non-voting shares. Your spouse, parents, children or a family trust for them can hold non-voting shares. TOSI rules mean dividends to a spouse who does not work in the business about 20 hours a week are usually taxed at the top rate.
How much tax can a PREC save?
Qualifying income up to $500,000 is taxed at about 11.2% combined from July 1, 2026, compared with personal marginal rates up to 53.53%. The benefit is a deferral on income you leave inside the corporation, so it depends on how much you do not need to withdraw.
Does my PREC need to register for HST?
Yes, once taxable commissions pass $30,000 over four consecutive calendar quarters. You can register voluntarily below that to recover HST paid on business expenses.
Does a PREC change my RECO insurance or errors and omissions cover?
You remain personally responsible for your obligations under TRESA, and your insurance stays in your own name. Ask your insurance broker to confirm your cover works with a PREC and whether the corporation needs its own policy.
How much does it cost to set up a PREC?
The Ontario government filing fee is $300 online, plus a NUANS report if you choose a named corporation. Legal, accounting and bookkeeping fees vary by provider, so ask for a written quote.
Sources
- Real Estate Council of Ontario (RECO): Personal Real Estate Corporations
- Government of Ontario: TRESA, Ontario Regulation 536/20 and the Ontario Business Registry
- Canada Revenue Agency: corporation tax rates, tax on split income, GST/HST registration and T2 filing guidance
Disclaimer: The information may be outdated. Please check with a registered CPA to verify the information. This guide is general information, not accounting, tax, legal or financial advice. Good Accounting is a marketing platform that lists professionals. It is not an accounting firm or a law firm. See also our accountants for real estate agents.