Ricardo Stone is employed as an architect by Right Angles Inc. (RAI). Ricardo is the team leader on several projects and contributes to setting the strategic direction of RAI's design themes. RAI maintains its market dominance through ensuring its employees have the latest computer hardware, design software, and 3D printers to develop distinctive designs. As a long-term employee who is instrumental to RAI's success, Ricardo earns an annual salary of $210,000.

To reduce his tax burden, Ricardo plans to incorporate a company, Curved Lines Inc. (CLI), to be eligible for corporate tax rates and reduce taxes payable. Ricardo would be the sole shareholder and sole employee and would NOT draw a salary from CLI, to avoid $5,188 in Canada Pension Plan premiums.

Apart from lower corporate tax rates, Ricardo also understands that there is an additional benefit to incorporation, whereby contractors of a company have access to a broader range of deductions than employees.

Using case facts, explain whether the income earned by CLI would be considered personal services business income.

Explain the tax consequences if CLI was determined to be earning personal services business income.