Many professionals who are members of a partnership have set up
a structure where their partnership interest is owned by one
professional corporation ("PC") and they and likely
family members own another PC which provides services to the
partnership PC (the "2 PC Structure"). The 2 PC Structure
was put in place because it allows access to a full small business
deduction, thereby increasing his or her tax deferral
opportunities.
Unfortunately, the 2016 Federal Budget indicated that the
Income Tax Act will be changed such that for fiscal years
starting after March 22, 2016, income earned by a corporation from
services directly or indirectly to a partnership where the
corporation's shareholder has a direct or indirect interest in
the partnership is no longer eligible for the small business
deduction.
