This is very similar to the income trust issue of last decade. A tax rule designed to promote a certain behavior started to be abused and the authorities closed it. Recall that BCE was set to become an income trust and pay no tax on income - except in the hands of investors that would pay at their rate which could be zero if a pension fund. The companies benefiting used similar motherhood statements that the deduction encouraged good behavior.

This incorporating rule is being abused and should be addressed especially income sprinkling which in my experience is a tax dodge by families. Either eliminate income sprinkling, or allow salaried employees to split income with spouses and kids to level the playing field.