Personal Real Estate Corporation (PREC) and stricter regulations for Ontario Realtors In March, a significant law affecting Realtors in Ontario received Royal Assent: The Trust in Real Estate Services Act, 2020 (TRESA). The new legislation developed from the Real Estate Business and Brokers Act, 2002 (REBBA). The Trust in Real Estate Services Act, 2020 (TRESA) enables Realtors to perform incorporation and receive remuneration through a Personal Real Estate Corporation (PREC). It will bring Realtors to a way higher standard than they used to be under REBBA through the changes to Realtor registration.

PRECs enable Realtors to get access to almost all the legal benefits of a typical private corporation through an efficient tax-planning vehicle.

Realtor’s business revenues and profits, including commissions and other related remuneration can be redirected via the PREC after creating. The Realtor works for the PREC which owns the real estate business. This brings tax deferral for the Realtor who can grow their income within the PREC before being subjected to income tax. This also helps Realtors defer personal income taxes since they will be able to choose when they pay themselves.

The PREC also needs shareholders. But the regulation requires that there can only be one Realtor – controlling shareholder, registered with the Real Estate Council of Ontario, holds all of the voting shares in the PREC. This regulation allows other registrants and related people (such as family members) to hold non-voting shares. This can be further beneficial in assisting Realtors to reduce their income tax burden if the related person is actively involved in the business. Realtors are able to reduce their entire family’s tax burden.

But keep in mind that since the PREC owns the business and any investments, property or insurance policies a Realtor may hold through it, the PREC is also required to pay its own tax. This is beneficial to Realtors, since it allows Realtors to benefit from lower small business tax rate or general corporate tax rate.

A PREC may not be beneficial all the time. The additional compliance can overweight the tax benefits. Make sure to consult a tax specialist before moving into the process.


While Realtors can be beneficial greatly from PRECs, TRESA has announced changes to the registration process, introducing new and renewing registrants to higher standards.  Under REBBA, an applicant was all but guaranteed a registration subject to an “unless conditions apply” clause.

A registrar should consider an applicant’s past financial position, before  approving an application for registration since their past conduct and any contraventions of the Code of Ethics could cause refusion of an application. And the registrar must satisfy that granting the registration  or renewal is not contrary to the public interest even though these conditions are met.

This requires Realtors stand in a higher standard in both their professional and personal conduct. Personal Real Estate Corporation (PREC) and stricter regulations for Ontario Realtors Any mistakes may raise an issue at renewal time, jeopardizing a Realtor’s ability to get back to business.

The Discipline Committee And appeals:

There is also one change introduced with TRESA that is under-considered – the expanded scope of the Discipline Committee and the changes to the appeals process.

The Discipline Committee is able to determine whether a registrant has contravened, both the Code of Ethics and any provision of TRESA and any other accompanying provisions of the regulations under TRESA, which is a huge change. Under REBBA, the Discipline Committee can only determine whether a registrant had contravened the Code of Ethics.

The Discipline Committee is now equipped with the ability of adding conditions to a registration, suspending a registration or revoking a registration. Furthermore, the registrar, or other appointed assessors can levy administrative penalties if a provision, a regulation or a condition of the registration has been violated. The penalties could be as much as $25,000.

The decisions can no longer be appealed to the Appeals Committee if a registrant disagrees. Appeals are handled by the License Appeal Tribunal. This will protect the procedural rights of the Realtors (appellant), while it may also make it harder to appeal decisions since it introduces more formality into the process and transforms it to be more quasi-judicial.

Personal Real Estate Corporation (PREC) and stricter regulations for Ontario Realtors Realtors should consider their obligations under the entirety of TRESA (not just under the Code of Ethics) carefully after these changes are made. Realtors’ ability of trading real estate can be significantly impacted if they fail to perform by their obligation.

TRESA manages to extend the ability to perform a realty business within a professional corporation, which also extended to other professionals. Now Realtors are under stricter registration requirements, supervised by the Discipline Committee, and a more formalised appeals process.

Muhammad Nasrullah,CPA, CGA, LPA
Chartered Professional Accountant
Licensed Public Accountant
206A – 2365 Finch Ave. West North York, ON. M9M 2W8
Tel: (1) 416-748-0817 ext 101 Fax:(1) 416-748-6814 E-mail: