What happens to my small business deduction if my corporation is associated with my sibling's company?

Corporations controlled by siblings can be deemed associated under the related-persons provisions built into the associated corporation rules, meaning your corporation and your sibling's could end up needing to share a single small business limit rather than each having its own, depending on how ownership and control are actually structured between the two of you. Being related as siblings is itself a relevant connection the rules are designed to catch, not something that's ignored just because you each run your own separate business.

Whether association actually results depends on the specific ownership and control details, how much of each corporation each of you owns, whether there are other cross-ownership interests, and whether the statutory deeming rules for related groups bring your two companies into common control despite operating them independently in practice. It isn't automatic in every sibling scenario, but the relationship itself is a meaningful factor the rules are built around.

Given how much a shared limit can affect two siblings' combined tax position compared to each having full separate access to the lower rate, this is a situation worth having reviewed specifically against your actual ownership structure, rather than assuming that running separate businesses is enough to avoid it.