The Problem With Personal Real Estate Corporations with Vic Gasparitsch | E057

The issues with Personal Real Estate Corporations In Ontario.

In this episode of Financial Planning for Canadian Business Owners, Jason Pereira, award–winning financial planner, university lecturer, and writer, interviews Vic Gasparitsch, a real estate lawyer who is raising the flag with the tax status surrounding the new Ontario Professional Real Estate Corporation!

Episode Highlights:

  • 1:07 – Vic Gasparitsch introduces himself and his profession.

  • 2:27 – What is a professional real estate corporation?

  • 5:48 – Is there any previous precedence for these PRECs?

  • 8:16 – Where does a T4A come into this situation?

  • 9:56 – Can officers split the income between the corporation and themselves?

  • 11:22 – Jason and Vic explain why splitting income is a problem.

  • 15:35 – How many of these PRECs have been set up?

  • 16:40 – Jason and Vic discuss the rude awakening that is awaiting agents who have set up a PREC.

  • 17:37 – Who else has agreed with Vic on the subject of PRECs?

  • 18:40 – Why would the government pass something like this?

  • 20:58 – Who gives a damn about tax fairness to realtors?

  • 23:35 – Jason and Vic discuss the options for realtors who have set up a PREC.

3 Key Points

  1. A professional real estate corporation can do anything it wants besides taking part in the real estate industry.

  2. PRECs allow agents to split the income between the corporation and themselves, which is a problem with the Lone Wolf accounting system that most agents use.

  3. All an agent has to do to set up a PREC is notify the Real Estate Council of Ontario that they have created a PREC and provide the address of service.

 

 Tweetable Quotes:

  • “If anything, corporations are designed to separate shareholders from the corporation for liability purposes.” – Jason Pereira

  • “It’s an attempt to divert what would be personal income...to a corporate entity which is a Canadian–controlled private corporation and entitled to small-business deduction.” – Vic Gasparitsch

  • “The brokerage firm is going to have to agree to switch the flip from PREC to personal payment for a period of time and then maybe back, and that’s suboptimal in so many ways.” – Jason Pereira

Resources Mentioned:

Transcript:

Producer: Welcome to the Financial Planning for Canadian Business Owners podcast. You will hear about industry  insights with award-winning financial planner and entrepreneur, Jason Pereira. Through the interviews  with different experts, with their stories and advice, you will learn how you can navigate the challenges  of being an entrepreneur, plan for success, and make the most of your business and life. And now, your  host, Jason Pereira. 

Jason Pereira: Hello, and welcome. Today [inaudible 00:00:36] Vic Gasparitsch. Vic is a lawyer who specifically practices  in the area of real estate in various forms. And in particular, he's been raising the flag about problems  with the new Ontario Professional Real Estate Corporations and issues with the Act that made these  things come true. There are some real concerns around the tax status of these, and Vic is, more or less,  the lone gunman out there that's warning people about what's going on. And I brought him on the show  to have this conversation. 

Jason Pereira: So with that, here's my interview with Vic. 

Jason Pereira: Vic, thanks for coming on. 

Vic Gasparitsch: My pleasure. Thank you for having me. 

Jason Pereira: So Vic Gasparitsch, tell us a little bit about who you are. 

Vic Gasparitsch: Lawyer with private practice. I'm a sole practitioner carrying on under a professional corporation. I  practice in downtown Toronto. I share a space with a litigation law firm. I'm a corporate lawyer, as I said.  The bulk of my practice involves the real estate brokerage industry. Not real estate. I don't touch real  estate, I'd be sued. But the brokerage industry itself, I do have a significant amount of involvement  there. The litigators I'm involved with, Gill & Mulholland, Neil Gill in particular. He does a huge amount  of work with RECO on the defense side, defending the complaints that RECO brings against agents. 

Jason Pereira: Yeah. So needless to say you're 

Vic Gasparitsch: I've sat on numerous brokerage firms across the province. And set up a lot of them. 

Jason Pereira: So basically, what it comes down to, when I said you were in real estate, I wasn't really doing you justice.  Basically the average real estate lawyer, as we think of it, typically closes on deals. You are more on the, for lack of a better term, industry infrastructure side. You basically have a long history of the business of  real estate brokerage and sales? 

Vic Gasparitsch: That's correct. 

Jason Pereira: So I brought you on the show because we were connected by Christine Brunsden, who's a fellow  colleague of both of ours, when she raised the flag on there being serious problems with the new  Ontario Professional Real Estate Corporation. So first off, before we get into what the problems are, let's  talk about what these corporations are, what they were intended to do. What is it that people think  these things are? 

Vic Gasparitsch: Well, let me first of all say, it's not a Professional Real Estate Corporation, Personal Real Estate  Corporation. 

Jason Pereira: My bad. 

Vic Gasparitsch: No, there's a huge difference there. Big legal difference. The intent was that it be a Professional Real  Estate Corporation. The intent was that the professional corporation would be permitted to be  registered under the Real Estate and Business Brokers Act as a PC, being able to trade in real estate. 

Vic Gasparitsch: The intent was that realtors could use a professional corporation the same way I do, the same way  doctors, dentists, and so on do. The same way it's done in British Columbia. Under our professional  corporation, as defined under the Business Corporations Act, as a corporation incorporated under the  act or carried on under the act, and which is allowed by the act that governs its industry. 

Vic Gasparitsch: Two, is issued a certificate as authorization to carry on business as a professional corporation. In Law  Society Act, I get a certificate of authorization every couple of years, I guess. Same thing with, again,  doctors, dentists, and so on. 

Vic Gasparitsch: That is not the case here. What we have here... No, let me go back a step. There was an Act about three  years ago, called the Tax Fairness to Realtors Act and it was put forward by members of the private  members bill, all three parties supported it, went to committee, it died in committee when the last  election was called. It would have done exactly what they wanted it to do. It created a Professional Real  Estate Corporation. It basically said the corporation could do nothing but trade in real estate, could do  nothing but act as a brokerage. That unfortunately died in the [inaudible 00:04:03]. Had that gone  through, we wouldn't be having this discussion today.

Jason Pereira: Fair enough. So that bill was kosher. It was in line with the precedence established elsewhere in other  jurisdictions and other 

Vic Gasparitsch: And other industries. 

Jason Pereira: Other industries, yeah. So that didn't happen. What happened? 

Vic Gasparitsch: Now, we've got changes that were made to the act, that provided for the creation of a Personal Real  Estate Corporation. What is that? It's a corporation of which the controlling shareholder must be an  agent or broker, registered with a brokerage. It must be the sole owner of the equity shares basically,  controlling shareholder. 

Vic Gasparitsch: It's the sole officer and director of the Personal Real Estate Corporation. The big difference is, what can a  PREC, a Personal Real Estate Corporation, do? Well, it can do everything. It can do anything, except it  cannot trade in real estate. It cannot hold out to be a brokerage, cannot be a brokerage. The PREC, its  controlling shareholders, officers, directors, employees are expressly prohibited from suggesting that  the PREC is anyway involved in the real estate business. 

Vic Gasparitsch: So it's got nothing to do with real estate [inaudible 00:05:05]. What does a PREC do? Theoretically, this  is where this makes no sense. A controlling shareholder has to be registered under the real estate and  business brokerage act with a brokerage. So what the PREC does, the business of the PREC is to make  the services of its controlling shareholder available to the brokerage. I'm sorry, but that makes no sense.  You're control 

Jason Pereira: Let me take a stop on that for a second. Is there even a precedent for that? I've never seen that.  Typically, the actions of an employee and an owner are separate under law and the concepts of  corporations, right? I have never seen something that basically says you have access to a shareholder. If  anything, corporations are designed to separate shareholders from the corporations for liability  purposes. 

Vic Gasparitsch: Yep. No, I agree entirely. So the business of the PREC is to make the services of its controlling  shareholder available to be an agent or a salesperson, or broker with a brokerage. Well, you're not doing  anything that doesn't already exist. That is the current state of being. Your controlling shareholder is  already an agent. 

Vic Gasparitsch: It's a total failure of consideration here. You're doing something that's already been done. Now, in  return for that, the brokerage pays you money. The amount of money it pays you happens to be  equivalent to the commissions that the agents would make, but they don't call it commissions anymore.  They call it remuneration. But what is it? The closest thing to an activity that the PREC carries on is, it's a  placement firm, it's a placement agency. It places one person with the brokerage and, in return for  which, it gets paid a fee, a service fee. That's the best argument that can be made. 

Vic Gasparitsch: It doesn't get paid the commission. It's paid the commission that the agents would have made, but it's a  service fee. It's not commission income to the PREC because the PREC is not in the sales business. So  we've got a break down there. First break down is that, again, it doesn't make sense. It makes absolutely  no sense because, again, it doesn't do anything that doesn't already exist. 

Vic Gasparitsch: The problem we now have, problem that the agent now has, is okay, I've got a PREC and I've got my  independent contractor. We're going to replace it with my brokerage. But the money I'm making that I  would've made is now being paid as a service fee to my PREC, for making me available to the brokerage.  Cool. 

Vic Gasparitsch: Now, I'm a hot shot agent and I've got, make it easy... I got 50,000 bucks of sales expenses this yeah, my  car, my signage, et cetera, et cetera, et cetera, my client dinners. I get 50 grand in legitimate write-offs  but you know what? I've got no income to write it off against. 

Jason Pereira: Because it's not commission income. 

Vic Gasparitsch: Because it's not to the PREC. What the agents tell me was, "That's not a problem. I'll transfer my  expenses to the PREC." No, I'm sorry. How do you transfer your legitimate sales expenses to the PREC?  The PREC is not in the sales business. You can't use them. 

Jason Pereira: Right. And you incur those in basically 

Vic Gasparitsch: In your personal name. 

Jason Pereira: Yeah, exactly. In your personal name, and you did so as a fact of the fact that you're working on behalf  of the brokerage firm, which is another party. 

Vic Gasparitsch: Yeah, exactly. Underneath the contractor remit, yeah. Which is all fine. So you've got legitimate  expenses that you now cannot write off anymore. 

Jason Pereira: So you can't write those off. One of the things that, when I brought this to the attention of a certain  brokerage firm that shall not be mentioned, was, "Well, that's not a problem. If you're worried about  that, you can just issue yourself a T4A from the PREC." Care to address that issue? 

Vic Gasparitsch: It doesn't apply. It doesn't apply. 

Jason Pereira: Exactly. 

Vic Gasparitsch: It just doesn't apply. It makes no sense. 

Jason Pereira: Well, the T4A's are typically self-employment income, typically commission or otherwise, flow through  from a corporation to an individual. And that allows them to deduct expenses. But again, if that person  is not employed by the PREC, acting as a commissioned agent for the PREC, then you can't issue the T4A. 

Vic Gasparitsch: Exactly. You are employed by the PREC. You're an officer of the PREC, but the PREC is not [crosstalk  00:08:43]. 

Jason Pereira: Not a commission. Yeah. Exactly. 

Vic Gasparitsch: No commissions involved. You're not paid a commission as an officer. 

Jason Pereira: The only solution that I've been given, alternatively this, is that solution basically also has this entire  massive gray or black area of don't do it, in tax law. 

Vic Gasparitsch: Oh no, absolutely. Absolutely. There's a breakdown here in corporate law. There is a breakdown here in  tax law. The way I see the PREC, it's an attempt basically to divert what would otherwise be personal  income coming to the agent, personal income, tax to personal income level. It's an attempt to divert it  to a corporate entity, which is a committee-controlled private corporation entitled to small business  deduction. But it's an attempt to divert it, but it doesn't work. It's not a legitimate way to convert your  sales income. It doesn't work.

Jason Pereira: Well, it's not so much that, again, if this has been done as a proper professional corporation, we've  crossed this bridge many, many times before. This is not something that hasn't been done before. It's  that this bill has managed to create almost a new classification of corporation without trying, that has  no precedent in tax law, that permits it to operate the way that the real estate agents think it does. So,  okay. So that's the structural issue. Talking about the actual practicality of money getting paid. So  basically the other alternative that was brought up as well, can't they just split the income between the  corporation and themselves? 

Vic Gasparitsch: That's an interesting point because the regulations that are created does contemplate and does permit  money to be paid to both the agent and to the PREC. It does permit that, it contemplates it. In that  particular case, if an agent knows he's going to have 50 grand in legitimate write-offs, let him take 50  grand, plus whatever, personally. The rest can be paid to the PREC as the service fee to the PREC for  providing, making him available as a placement company. It's a placement agency. 

Vic Gasparitsch: The problem with that, and it's not a legal problem, the problem... And I've discussed this with a number  of large, large brokerages. I act for a number of them, but some other ones I don't act for. The problem  is everybody uses the Lone Wolf accounting system. 

Jason Pereira: Which is a software, to be clear. 

Vic Gasparitsch: The software. The software does not permit commission to be allocated between an individual and that  individual's PREC. 

Jason Pereira: Single outflow. It's got to go to one source? 

Vic Gasparitsch: One or the other, yeah. Now, the problem still exists. That deals with the matter of the agent not having  any income against which you can write off expenses, but it does not deal with the larger issue, which is  that the whole thing is a sham. 

Jason Pereira: This is true. So 

Vic Gasparitsch: It's a fictitious company. 

Jason Pereira: It's a type of thing that shouldn't exist because it doesn't really exist under corporate law. And we'll get  to that opinion in a second, but I already had one of these set up long before we ever met for a client of  mine. And I mean, the "simple" yet less than elegant solution is that the brokerage firm is going to have to agree to flip the switch from PREC to personal payment for a period of time and then maybe back.  And that's sub optimal in so many ways. First of all, I'm sure the agencies don't want to be doing that for  every one of their agents. That's just a major pain. 

Vic Gasparitsch: Yep, absolutely. 

Jason Pereira: Secondly, there's the timing of cash flows. So it's 100% of the commission coming to them with no  discretion as to how much. So you can have a big deal, small deal, whatever it is. So now I'm trying to flip  a switch at a point in the future, which may take me beyond an income that I actually wanted them to  pay the client in the first place. So it becomes a, I don't know that I can flip this switch in the most tax  efficient way possible. 

Vic Gasparitsch: Yeah, there's that problem. And again, there's also a problem with the software system that doesn't  allow you to do it. 

Jason Pereira: Well, it doesn't allow you to split between two, but it allows you to go whole from one to the other. So  that's the problem. 

Vic Gasparitsch: It's all one or the other. Yes. It's all one or the other. Either the agent gets paid under the independent  contractor agreement or it gets paid as remuneration to the PREC for theoretically making you available  to the brokerage firm, which again is nonsense because you were already an independent contractor  engaged by and registered with the brokerage firm. So the PREC isn't doing anything new, there's no  consideration. 

Jason Pereira: So, I mean, to sum up the two aspects of this, because you've mentioned this, it's a breakdown of  corporate laws, a breakdown of tax law. So from a corporate law standpoint, the entire bizarre nature of  this thing not being a sales corporation, that it is licensing access to the shareholder, not the employee  of the firm, to the brokerage. And on top of that, it is also receiving... Basically that relationship  preexisted already. This is all just a head-scratcher, quite honestly. 

Vic Gasparitsch: Exactly. And that's why I [inaudible 00:13:04] nothing but an attempt to, again, divert taxable income  into a corporate entity, which gets a small business deduction. And [inaudible 00:13:13] like that. I  mean, CRA has crapped on those kinds of things in the past. 

Jason Pereira: Well, that's the tax aspect. So from the structure aspect, we know this is a bit of a mess, right? And it's  not that the concept of having your professional income money go into a corporation to access a small  business deduction rate is a problem. 

Vic Gasparitsch: If it's a Professional Real Estate Corporation, absolutely not. Every lawyer does it, every doc, every  dentist does it. It's allowed. It's personal. 

Jason Pereira: Yeah. So, I mean, it's not the act of how you get paid to a corporation, although some anti-corporation  people may basically think otherwise. It's really trying to respect the fact that these people are  technically self-employed individuals who did not have the right to incorporate previously. But instead  of going down the road of following the properly blessed structure of this, something new, and for lack  of better term, half-baked was basically conceived of. That now we have a tax problem and we have a  tax problem on multiple levels. So you hit upon the first one, this was done by the province of Ontario.  The federal government has got no incentive to bless this thing or let it be. Because if the feds screw up  something in the tax bill, they could tap on CRA shoulder, say, "Hey, we kind of screwed something up. 

Jason Pereira: Maybe just let people let it go." That's been known to happen, but for the provinces to do that with CRA,  they got no pull. They've got no pull. So CRA has already established precedent for it. Hey, this is a, for  lack of better term, [inaudible 00:14:35] for the small business tax rate scheme without a legitimate  enterprise relationship. Goodbye. They just typically laugh at you and say, "Well, here's your normal tax  bill." So that's the first problem. So they're in danger there. And then, so when we sum up the tax  standpoint issues, it is they're in danger of having the small business deduction disallowed in the first  place. Now that is, depending on some of the agents I know, my goodness. Expecting a tax bill and filing  a tax bill at X and then getting that done and [inaudible 00:15:04] magnitude. We're talking what? 12.5%  versus 53.53. Four X what you were expecting? 

Jason Pereira: I mean, oh my God, it's enough to make someone have a heart attack. So that's the first thing. The  second thing is, can you even deduct your legitimate business expenses anymore because of the  nonsense of this? And a third is, here's the other thing too, is that besides you being the lone wolf,  basically, out there, not the accounting system, but you're the lone voice basically screaming into the  night about this point. And there's going to be more, we just discussed this, more coming out about this  in the near future. But a lot of people, how many of these things were set up? I mean, you had some  stats on that. 

Vic Gasparitsch: Well, yeah. The last stat I got would be about three weeks ago. Now, remember with a PREC, all you're  required to do is notify RECO, the real estate council of Ontario, which is the governing body. All you  have to do notify the PREC. I haven't created a PREC, here's the name of the PREC, and here's the  address for service and that's it, no more. So RECO has no further involvement. The last number I got  was about three weeks ago, they had had about 4,700 notifications. 

Jason Pereira: There you go, 4,700 notifications. So we're approaching 5,000 realtors in this province alone. 

Vic Gasparitsch: I expect right now it's over five, yeah. 

Jason Pereira: Yeah. So over 5,000 realtors who think they've done something very wise from a tax planning  standpoint, they went to their lawyers and set this corporation. The lawyer set it up because lawyers are  not one to question, by default, is this bill even legitimate? They are like, okay, we know that there's  some things we've got to follow. We'll do that. They set up the corporation and they're setting up the  accounting systems and they're thinking they're going to save a bundle of tax. And they could be in for a  very rude awakening come next year when they get their tax bill. 

Vic Gasparitsch: Well, what I've done when I've been approached, I've always insisted the conversation to take place  with the client's accountant present. And invariably, with a couple of exceptions, invariably the  accountant says that do not be the Guinea pig. Let's just ride it out and see what happens. Stay as you  are. There are a few things [inaudible 00:16:58]. Jason, you've received my talking papers for my  presentation that I did a while ago and the clients, they get those. I send it to them. Here are my  concerns. The accountant gets them. Here are my concerns. And as I said, the accountants invariably  said, "No, back off, do not be a Guinea pig. Let somebody else take the pain." 

Jason Pereira: Let's throw some more credibility behind this, this isn't 

Vic Gasparitsch: [crosstalk 00:17:21] a lot of accountants [inaudible 00:17:22]. The reality is I could have set up a ton of  these. [inaudible 00:17:27]. 

Jason Pereira: There you go. Yeah, you're talking yourself out of money. So let's just add some more credibility to this.  This is not just you who said this. You've taken this opinion. You've gotten your opinion confirmed. Who  else has basically looked at your view and said, "Vic, he got this right." 

Vic Gasparitsch: There were some other lawyers that I've dealt with that agree entirely. There are, again, there are  accounting firms, Grant Thornton for one, Fuller Landau. They're major accounting firms dealing with  the tax experts in both those firms. Fuller Landau acts for my largest client. And they agree with me. The  gentleman over at Grant Thornton, again, also in agreement. [inaudible 00:18:03] these are real risks. I  know I may be wrong, okay. But these are real risks and we can't answer them. And they share the exact  same concerns. Some other accounting firms in different parts of the province, that some lawyers have  come to me and have asked my opinion on. But again, like you said, we're probably over 5,000  registrations by now. Agents are so anxious to proceed with this. They just will not listen. I've had agents  get in arguments over, well, as you said, the government wouldn't do this. The government wouldn't  pass something that's not going to...

Jason Pereira: So that's the common route. So the first one was I doubt very much that the government would ever  pass a bill that had this kind of flawed thinking to it. And I've been around long enough and dealt with  tax long enough and other regulatory stuff long enough, to know that that is a very funny statement. There's plenty of precedent that shows that they do that all the time. I will go back to the small business  tax fairness stuff that they were trying to pass several years ago, which was just utter bonkers, lunacy. 

Vic Gasparitsch: That's lunacy. 

Jason Pereira: And countless... I can sit back with some of my legal and accounting friends, we can sit back and have a  couple of drinks and reminisce about the days of lobbying over stupid crap that should never have been  tabled in the first place. And unfortunately, a lot of people take a lot of solace in the government getting  things right. Yet at the same time, seem to think government's incompetent. I don't understand the  duality of that nature, but the point is is that you can't take that response, that action. Because, at the  end of the day, you're the liability. You're taking liability. 

Jason Pereira: So I know you know, I would say the word of advice that I think you'll probably echo is, if someone's  already set one of these things up, just know that you may not save a penny on this, at least right now.  Something's going to have to be done because, with over 5,000 of these things set up and more every  day, guaranteed there's going to be a lot of outcry from these people if it's not fixed. But we might have  a year or two where it's not fixed and you're on the hook and it's more so the shock, right? It's one  thing, fair is fair. You tell me that, hey, you set up the corporation. Something's not quite right. We're  going to try to fix this. We might not get to it in the year. No one's going to be happy with that. So  getting that notice of assessment from CRA saying, it's allowed all of this stuff and you owe us X, wow. 

Vic Gasparitsch: Why would CRA cooperate with correcting something? This has been their position on the line. We're  not saying anything that CRA hasn't done before. This is a common position they've always taken on  these kinds of issues. There's nothing shocking here. 

Jason Pereira: Hey, I mean, there's an old saying, if they had their choice they'd tax everything. 

Vic Gasparitsch: They're not going to accommodate the Ontario conservative government in changing the tax laws, it's  just not going to happen. So the unfortunate thing I emphasized, had the original plan gone through, the  original Act, again, we wouldn't be talking today. 

Jason Pereira: So let's talk about that. That Act, which actually held this properly and made it a professional corp, not a  personal corp. Talk to me about why did that not go through?

Vic Gasparitsch: Well, first of all, they called it the tax fairness for realtors [inaudible 00:20:54], which was pure lunacy  and idiocy. Who gives a damn about tax fairness to realtors? 

Jason Pereira: Realtors. 

Vic Gasparitsch: Okay. Realtors, yeah. Who else? What motivation is there for legislators to put that through? Beyond  that, I don't know. 

Jason Pereira: Lobbying. 

Vic Gasparitsch: The bill died, like I said, it sat in committee for three, four months, whatever, five months, it didn't get  dealt with. And then the bridge was dropped. And with the election, that was the end of it. Why? I have  my theories on why. 

Jason Pereira: Fair enough. One of the things we discussed, we'll leave the political ones out of this. But I mean, one of  the things that we discussed previously was that if you have a professional corp structure, you need to  have a bureaucracy to basically police that, right? 

Vic Gasparitsch: Exactly. That's why. That's why. Here's the thing, Real Estate Council of Ontario is the body that  regulates the industry. I have worked with the side that does the registrations. There are some really  good people there. They are working their fucking asses off. They're all working from home still. They  are behind, they are working like crazy to get stuff done. Like I said, the other side, the one that Neil  works with, again, I don't work with that side. But my side, the people that I send stuff to for  registrations and that kind of stuff, they're phenomenal people. They're great. They work their butts off.  But you know what? They don't have enough of them. They're overworked. So as I said, there is no  registration process, just the notification to RECO that this is a PREC, here's the address for service.  That's the end of it. 

Jason Pereira: Yeah, I mean, I don't get it. 

Vic Gasparitsch: [crosstalk 00:22:23] Registration system. Because the government would have had that poured a ton of  money into RECO to hire the people to be able to do it and manage it. This is not a RECO [crosstalk  00:22:33]. 

Jason Pereira: Isn't this, I mean, to me, this is different. I look at things like I get this is the way government looks at  things sometimes, but to me it's like, you want this? No problem. Guess what realtors? You're paying for  it. To me, that would be it. It'd be like, OREA, you want this? You're funding the actual development of  this. And then your agents pay an annual fee to basically maintain the bureaucracy. But again,  depending on who you talk to, they don't necessarily want more government bureaucracy in any way,  shape or form. So I mean, what a genius solution I have for a problem that shouldn't exist in the first  place, but it is what it is. 

Vic Gasparitsch: [crosstalk 00:23:01] the bureaucracy to do 5,000 registrations, then monitor them. Then you [inaudible  00:23:08] rules on them and so on so forth. Massive bureaucracy. They can do it in VC because it's a lot  smaller real estate population, a lot fewer realtors than Ontario. 

Jason Pereira: Just, as far as I'm concerned, if they want access to it, charge them for it. That's me. But anyway. So let's  wrap this up with a couple of things, two things. So I think your advice is summed up. If you haven't set  one of these things up, don't, right? That's basically your advice at this point. 

Vic Gasparitsch: Right now, yep. Wait and see what happens. 

Jason Pereira: If you have set one of these things up, you have two choices. Choice A is leave it alone. Let's let the  corporations sit there, file your zero return, wait for it to get fixed, and keep doing what you were doing  previously. Right? 

Vic Gasparitsch: Yup. 

Jason Pereira: And the third choice comes down to, if you want to take the chance that you can get access to small  business tax rate, then you're going to have to flip that switch from personal to corporate and maybe  back and be a nuisance to your agency. But that's really your only choice, right? Those are the only three  choices. Either just don't play the game or play the game and hope it works out well. But either way, you  know that you're going to be probably no worse off from a tax standpoint, but you'll be worse off from  an administrative and setup standpoint. 

Vic Gasparitsch: And the third option is, again, it's a nightmare. You've got two [inaudible 00:24:14], A, flipping a switch  for the brokerage. I guess that right now they will not do it because of the software they use. They say  they cannot do it. 

Jason Pereira: They can. I pushed them on that. So don't accept that necessarily. They may not want to.

Vic Gasparitsch: Tell me about that later. That's great. But the other problem is still, again, the attempt to divert income,  which otherwise personal income, into a corporate entity. There's no basis for doing it. 

Jason Pereira: Yeah, exactly. So, I mean, at the end of the day, you're taking the chance. You're taking the chance, a  very probable chance, the CRA says, "What is this thing? And what is it you mean that you get to pay  12.5%? No, thank you. That's not it." So again, from a tax standpoint, you could end up no better off.  They could just be like, "Yeah, that money, that's yours. That's not the corps, that's yours. Cut us a check for the difference." So from that standpoint 

Vic Gasparitsch: And add the interest in fines too. 

Jason Pereira: Well, potentially, yeah. We'll see how that goes. So it is what it is. So yeah. So I mean, that's rough. So  good news is, is that I'm helping you get the message out there about these. Please keep doing what  you're doing because there's a lot of people going to pay a lot of, again, if people are doing things that  they think are according to the rules and fair play and they get smacked in the mouth for it, because  they couldn't be bothered to pass the bill that basically was actually going to take care of the problem  properly. That ain't right. That stuff no one signed up for. So is what it is. So Vic, if anyone wants to find  you and to discuss this in greater detail, where can they find you? 

Vic Gasparitsch: Phone number (416) 804-2880. That's my cell phone. That's basically on seven days a week.  Vic@gasparitschpc.com. 

Jason Pereira: Excellent. Vic, thank you so much for this. 

Vic Gasparitsch: My pleasure, thank you. 

Jason Pereira: And thank you for the duty you're doing to basically get this message out. 

Vic Gasparitsch: Okay, guy. Talk to you later. 

Jason Pereira: So that was my interview with Vic Gasparitsch about the Personal Real Estate Corporations. As you can  see, it's a bit of a gong show. So again, if you haven't gone down this road, maybe wait. If you have gone  down this road, tread with caution. Either opt out or just know that you could basically end up paying  the same or more when you factor in penalties. So it is what it is. This is a message we're just trying to get out there. And I hope if you, as a listener, or someone you know is affected by this, please share this  recording so that they're more informed. As always, if you enjoyed this podcast, please leave a review  on iTunes, Stitcher, or whatever you see your podcasts on. And until next time take care. 

Producer: This podcast was brought to you by Woodgate Financial, an award-winning financial planning firm,  catering to high net worth individuals, business owners, and their families. To learn more, go to  woodgate.com. You can subscribe to this podcast on Apple podcasts, Stitcher, Google Play, and Spotify,  or find more episodes at jasonpereira.ca. You can even ask Siri, Alexa or Google home to subscribe for  you.

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