Two spouses provide trucking services on behalf of a corporation operating a PSB to the same third party. Are they incorporated employees so that both salaries are deductible? CRA responded:
In our view, a corporation could carry on a PSB even if it has more than one incorporated employee, to the extent that the following provisions apply to each of those employees:
- Each incorporated employee is a specified shareholder of the PSB … .;
- Each incorporated employee provides services on behalf of the PSB to a person or a partnership;
- Had it not been for the existence of the corporation carrying on the PSB, it must be reasonable to consider each incorporated employee to be an officer or employee of the person or partnership to whom the services are rendered.
Thus … a corporation that carries on a PSB will be able to deduct the salaries of the two trucker spouses if the two trucker spouses are considered to be incorporated employees of the corporation.