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CANADA

 

INCORPORATING IN CANADA

GENERAL FEATURES
GOVERNMENT IN CANADA

 

Canada is a federation. The federal system of government means that powers and responsibilities are divided between the federal government and the 10 Canadian provincial governments. Canada also has three territories in the far North.

In general, the federal government is responsible for matters that affect all of Canada. These include national defence, foreign policy and citizenship. Provincial and territorial governments look after such matters as education, health care and highways. They share responsibilities with the federal government in some areas, such as protecting the environment.

There is also a third level of government at the community level. This level, known as municipal (or local) government, is responsible for local matters such as policing, firefighting, snow removal and recycling programs.

Canadian citizens can vote in elections for all three levels of government.

The Parliament of Canada
Canada has a system of parliamentary government. The Parliament has three parts: the Queen, the House of Commons and the Senate. Canada’s Parliament is located in Ottawa, our national capital.

Her Majesty Queen Elizabeth II is Canada’s official head of state. She is represented in Canada by the Governor General, who must sign all federal laws. This is what makes Canada a constitutional monarchy.

The House of Commons is the national legislature elected by Canadian citizens. It is made up of 308 members of Parliament, or MPs. MPs usually represent a political party, although some members do sit as independent members of Parliament.

The Senate is the Upper House of Parliament. Members of the Senate are appointed by the Governor General upon recommendation by the Prime Minister.

With some exceptions, all laws must be approved by the House of Commons, the Senate and the Governor General before they become law. Most parliamentary legislation is introduced by the government.

How a Government Is Formed
The political party with the most members in the House of Commons takes the leading role in forming a government. If it has a majority of seats (155 or more), then it forms a majority government. If it has fewer than 155 seats, the leading party will seek the cooperation of other parties, and form a minority government. The leader of the party that forms the government becomes the Prime Minister. The party with the second highest number of seats becomes the Official Opposition. Its leader becomes the Leader of the Opposition. In the federal election of June 28, 2004, no party won a majority of the seats in the House of Commons. Canada is currently ruled by a minority government.

The Prime Minister chooses a Cabinet from members of the leading party in the House of Commons. The Prime Minister and the Cabinet must maintain the confidence of the House of Commons. This is known as “responsible government.”

Each Cabinet minister has a specific responsibility. Most ministers are responsible for the operation of one or more federal departments or agencies. The top official in each department or agency is a Deputy Minister. Deputy Ministers are usually career public servants. They are appointed by the Prime Minister.

Under the Constitution Act of 1867, the federal government is responsible for national defence, criminal law, banking, the postal system and foreign relations. It is also involved in many other areas, including transportation, communications, immigration, health and environmental matters.

Provincial Governments
Governments are formed in the provinces in much the same way as at the federal level. The party with the greatest number of seats in the provincial legislature forms the government. The leader of this party becomes the Premier of the province, who appoints a cabinet from the elected members of the leading party. Majority and minority governments are possible at the provincial level.

Provincial legislatures do not have an Upper House. In order for provincial legislation to become law, it must be approved by the provincial legislature and the Queen’s provincial representative, the Lieutenant Governor.

Provincial governments are constitutionally responsible for civil justice, property and municipal institutions. They also share responsibility with the federal government for such matters as health services, agriculture, immigration, social assistance and transportation.

Find out more about government in your province.
http://www.canada.gc.ca/othergov/prov_e.html

Territorial Governments
The territories are not sovereign units. Their powers are delegated by Parliament, so they are subordinate bodies. The territories also have elected assemblies that follow many of the same practices as the provincial and federal governments. They hold many of the same responsibilities as provincial governments in areas such as health, transportation, social assistance and the environment.
Find out more about government in your territory.
http://www.canada.gc.ca/othergov/prov_e.html

Local Governments
Local governments are elected to manage municipalities, cities, towns and regions. Local governments do not have constitutional powers, but rather functions delegated to them by other levels of government. The leader of a municipal government is usually known as a mayor. The other elected members are councillors. Both are elected directly, and they usually do not represent political parties.

Local governments are responsible for services within a city or region, including police and fire protection, water and sewage services, recreation services and local public transportation.

Official bilingualism
Official bilingualism gives Canadians the right to communicate with the federal government, especially the courts and Parliament, in either English or French.

 


GENERAL FEATURES – TABLE

Introduction

Canada

Background: A land of vast distances and rich natural resources, Canada became a self-governing dominion in 1867 while retaining ties to the British crown. Economically and technologically the nation has developed in parallel with the US, its neighbor to the south across an unfortified border. Canada's paramount political problem is meeting public demands for quality improvements in health care and education services after a decade of budget cuts. Canada also faces questions about integrity in government following revelations regarding a corruption scandal in the federal government that has helped revive the fortunes of separatists in predominantly francophone Quebec.

 

Geography

Canada

Location:

Northern North America, bordering the North Atlantic Ocean on the east, North Pacific Ocean on the west, and the Arctic Ocean on the north, north of the conterminous US

Geographic coordinates:

60 00 N, 95 00 W

Map references:

North America

Area:

total: 9,984,670 sq km
land: 9,093,507 sq km
water: 891,163 sq km

Area - comparative:

somewhat larger than the US

Land boundaries:

total: 8,893 km
border countries: US 8,893 km (includes 2,477 km with Alaska)

Coastline:

202,080 km

Maritime claims:

territorial sea: 12 nm
contiguous zone: 24 nm
exclusive economic zone: 200 nm
continental shelf: 200 nm or to the edge of the continental margin

Climate:

varies from temperate in south to subarctic and arctic in north

Terrain:

mostly plains with mountains in west and lowlands in southeast

Elevation extremes:

lowest point: Atlantic Ocean 0 m
highest point: Mount Logan 5,959 m

Natural resources:

iron ore, nickel, zinc, copper, gold, lead, molybdenum, potash, diamonds, silver, fish, timber, wildlife, coal, petroleum, natural gas, hydropower

Land use:

arable land: 4.57%
permanent crops: 0.65%
other: 94.78% (2005)

Irrigated land:

7,850 sq km (2003)

Natural hazards:

continuous permafrost in north is a serious obstacle to development; cyclonic storms form east of the Rocky Mountains, a result of the mixing of air masses from the Arctic, Pacific, and North American interior, and produce most of the country's rain and snow east of the mountains

Environment - current issues:

air pollution and resulting acid rain severely affecting lakes and damaging forests; metal smelting, coal-burning utilities, and vehicle emissions impacting on agricultural and forest productivity; ocean waters becoming contaminated due to agricultural, industrial, mining, and forestry activities

Environment - international agreements:

party to: Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Persistent Organic Pollutants, Air Pollution-Sulfur 85, Air Pollution-Sulfur 94, Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands
signed, but not ratified: Air Pollution-Volatile Organic Compounds, Marine Life Conservation

Geography - note:

second-largest country in world (after Russia); strategic location between Russia and US via north polar route; approximately 90% of the population is concentrated within 160 km of the US border

 

People

Canada

Population:

33,098,932 (July 2006 est.)

Age structure:

0-14 years: 17.6% (male 2,992,811/female 2,848,388)
15-64 years: 69% (male 11,482,452/female 11,368,286)
65 years and over: 13.3% (male 1,883,008/female 2,523,987) (2006 est.)

Median age:

total: 38.9 years
male: 37.8 years
female: 39.9 years (2006 est.)

Population growth rate:

0.88% (2006 est.)

Birth rate:

10.78 births/1,000 population (2006 est.)

Death rate:

7.8 deaths/1,000 population (2006 est.)

Net migration rate:

5.85 migrant(s)/1,000 population (2006 est.)

Sex ratio:

at birth: 1.05 male(s)/female
under 15 years: 1.05 male(s)/female
15-64 years: 1.01 male(s)/female
65 years and over: 0.75 male(s)/female
total population: 0.98 male(s)/female (2006 est.)

Infant mortality rate:

total: 4.69 deaths/1,000 live births
male: 5.15 deaths/1,000 live births
female: 4.22 deaths/1,000 live births (2006 est.)

Life expectancy at birth:

total population: 80.22 years
male: 76.86 years
female: 83.74 years (2006 est.)

Total fertility rate:

1.61 children born/woman (2006 est.)

HIV/AIDS - adult prevalence rate:

0.3% (2003 est.)

HIV/AIDS - people living with HIV/AIDS:

56,000 (2003 est.)

HIV/AIDS - deaths:

1,500 (2003 est.)

Nationality:

noun: Canadian(s)
adjective: Canadian

Ethnic groups:

British Isles origin 28%, French origin 23%, other European 15%, Amerindian 2%, other, mostly Asian, African, Arab 6%, mixed background 26%

Religions:

Roman Catholic 42.6%, Protestant 23.3% (including United Church 9.5%, Anglican 6.8%, Baptist 2.4%, Lutheran 2%), other Christian 4.4%, Muslim 1.9%, other and unspecified 11.8%, none 16% (2001 census)

Languages:

English (official) 59.3%, French (official) 23.2%, other 17.5%

Literacy:

definition: age 15 and over can read and write
total population: 99%
male: 99%
female: 99% (2003 est.)

 

Government

Canada

Country name:

conventional long form: none
conventional short form: Canada

Government type:

constitutional monarchy that is also a parliamentary democracy and a federation

Capital:

name: Ottawa
geographic coordinates: 45 25 N, 75 40 W
time difference: UTC-5 (same time as Washington, DC during Standard Time)
daylight saving time: +1hr, begins second Sunday in March; ends first Sunday in November
note: Canada is divided into six time zones

Administrative divisions:

10 provinces and 3 territories*; Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories*, Nova Scotia, Nunavut*, Ontario, Prince Edward Island, Quebec, Saskatchewan, Yukon Territory*

Independence:

1 July 1867 (union of British North American colonies); 11 December 1931 (independence recognized)

National holiday:

Canada Day, 1 July (1867)

Constitution:

made up of unwritten and written acts, customs, judicial decisions, and traditions; the written part of the constitution consists of the Constitution Act of 29 March 1867, which created a federation of four provinces, and the Constitution Act of 17 April 1982, which transferred formal control over the constitution from Britain to Canada, and added a Canadian Charter of Rights and Freedoms as well as procedures for constitutional amendments

Legal system:

based on English common law, except in Quebec, where civil law system based on French law prevails; accepts compulsory ICJ jurisdiction, with reservations

Suffrage:

18 years of age; universal

Executive branch:

chief of state: Queen ELIZABETH II (since 6 February 1952), represented by Governor General Michaelle JEAN (since 27 September 2005)
head of government: Prime Minister Stephen HARPER (since 6 February 2006)
cabinet: Federal Ministry chosen by the prime minister usually from among the members of his own party sitting in Parliament
elections: none; the monarchy is hereditary; governor general appointed by the monarch on the advice of the prime minister for a five-year term; following legislative elections, the leader of the majority party or the leader of the majority coalition in the House of Commons is automatically designated prime minister by the governor general

Legislative branch:

bicameral Parliament or Parlement consists of the Senate or Senat (members appointed by the governor general with the advice of the prime minister and serve until reaching 75 years of age; its normal limit is 105 senators) and the House of Commons or Chambre des Communes (308 seats; members elected by direct, popular vote to serve for up to five-year terms)
elections: House of Commons - last held 23 January 2006 (next to be held in 2011)
election results: House of Commons - percent of vote by party - Conservative Party 36.3%, Liberal Party 30.2%, New Democratic Party 17.5%, Bloc Quebecois 10.5%, Greens 4.5%, other 1%; seats by party - Conservative Party 124, Liberal Party 103, New Democratic Party 29, Bloc Quebecois 51, other 1

Judicial branch:

Supreme Court of Canada (judges are appointed by the prime minister through the governor general); Federal Court of Canada; Federal Court of Appeal; Provincial Courts (these are named variously Court of Appeal, Court of Queens Bench, Superior Court, Supreme Court, and Court of Justice)

Political parties and leaders:

Bloc Quebecois [Gilles DUCEPPE]; Conservative Party of Canada (a merger of the Canadian Alliance and the Progressive Conservative Party) [Stephen HARPER]; Green Party [ Elizabeth MAY]; Liberal Party [Stephane DION]; New Democratic Party [Jack LAYTON]

Political pressure groups and leaders:

NA

International organization participation:

ACCT, AfDB, APEC, Arctic Council, ARF, AsDB, ASEAN (dialogue partner), Australia Group, BIS, C, CDB, CE (observer), EAPC, EBRD, ESA (cooperating state), FAO, G-7, G-8, G-10, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICFTU, ICRM, IDA, IEA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO, ITU, MIGA, MINUSTAH, MONUC, NAFTA, NAM (guest), NATO, NEA, NSG, OAS, OECD, OIF, OPCW, OSCE, Paris Club, PCA, PIF (partner), SECI (observer), UN, UNAMSIL, UNCTAD, UNDOF, UNESCO, UNHCR, UNMOVIC, UNRWA, UNTSO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WToO, WTO, ZC

Diplomatic representation in the US:

chief of mission: Ambassador Michael WILSON
chancery: 501 Pennsylvania Avenue NW, Washington, DC 20001
telephone: [1] (202) 682-1740
FAX: [1] (202) 682-7701
consulate(s) general: Atlanta, Boston, Buffalo, Chicago, Dallas, Denver, Detroit, Los Angeles, Miami, Minneapolis, New York, Phoenix, San Diego, San Francisco, Seattle, Tucson
consulate(s): Anchorage, Houston, Philadelphia, Princeton (New Jersey), Raleigh, San Jose (California)

Diplomatic representation from the US:

chief of mission: Ambassador David H. WILKINS
embassy: 490 Sussex Drive, Ottawa, Ontario K1N 1G8
mailing address: P. O. Box 5000, Ogdensburgh, NY 13669-0430
telephone: [1] (613) 238-5335, 4470
FAX: [1] (613) 688-3082
consulate(s) general: Calgary, Halifax, Montreal, Quebec, Toronto, Vancouver, Winnipeg

Flag description:

two vertical bands of red (hoist and fly side, half width), with white square between them; an 11-pointed red maple leaf is centered in the white square; the official colors of Canada are red and white

 

Economy

Canada

Economy - overview:

As an affluent, high-tech industrial society in the trillion dollar class, Canada resembles the US in its market-oriented economic system, pattern of production, and affluent living standards. Since World War II, the impressive growth of the manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA) (which includes Mexico) touched off a dramatic increase in trade and economic integration with the US. Given its great natural resources, skilled labor force, and modern capital plant, Canada enjoys solid economic prospects. Top-notch fiscal management has produced consecutive balanced budgets since 1997, although public debate continues over how to manage the rising cost of the publicly funded healthcare system. Exports account for roughly a third of GDP. Canada enjoys a substantial trade surplus with its principal trading partner, the US, which absorbs more than 85% of Canadian exports. Canada is the US' largest foreign supplier of energy, including oil, gas, uranium, and electric power.

GDP (purchasing power parity):

$1.111 trillion (2005 est.)

GDP (official exchange rate):

$1.035 trillion (2005 est.)

GDP - real growth rate:

2.9% (2005 est.)

GDP - per capita (PPP):

$33,900 (2005 est.)

GDP - composition by sector:

agriculture: 2.2%
industry: 29.4%
services: 68.4% (2005 est.)

Labor force:

16.3 million (December 2005)

Labor force - by occupation:

agriculture 2%, manufacturing 14%, construction 5%, services 75%, other 3% (2004)

Unemployment rate:

6.8% (2005 est.)

Population below poverty line:

15.9%; note - this figure is the Low Income Cut-Off (LICO), a calculation that results in higher figures than found in many comparable economies; Canada does not have an official poverty line (2003)

Household income or consumption by percentage share:

lowest 10%: 2.8%
highest 10%: 23.8% (1994)

Distribution of family income - Gini index:

33.1 (1998)

Inflation rate (consumer prices):

2.2% (2005 est.)

Investment (gross fixed):

20.5% of GDP (2005 est.)

Budget:

revenues: $159.6 billion
expenditures: $152.6 billion; including capital expenditures of $NA (2004)

Public debt:

69.6% of GDP (2005 est.)

Agriculture - products:

wheat, barley, oilseed, tobacco, fruits, vegetables; dairy products; forest products; fish

Industries:

transportation equipment, chemicals, processed and unprocessed minerals, food products, wood and paper products, fish products, petroleum and natural gas

Industrial production growth rate:

2.6% (2005 est.)

Electricity - production:

566.3 billion kWh (2003)

Electricity - production by source:

fossil fuel: 28%
hydro: 57.9%
nuclear: 12.9%
other: 1.3% (2001)

Electricity - consumption:

520.9 billion kWh (2003)

Electricity - exports:

22 billion kWh (2004)

Electricity - imports:

33 billion kWh (2004)

Oil - production:

2.4 million bbl/day (2004)

Oil - consumption:

2.3 million bbl/day (2004)

Oil - exports:

1.6 million bbl/day (2004)

Oil - imports:

963,000 bbl/day (2004)

Oil - proved reserves:

178.9 billion bbl
note: includes oil sands (2004 est.)

Natural gas - production:

165.8 billion cu m (2003 est.)

Natural gas - consumption:

90.95 billion cu m (2003 est.)

Natural gas - exports:

91.52 billion cu m (2003 est.)

Natural gas - imports:

8.73 billion cu m (2003 est.)

Natural gas - proved reserves:

1.673 trillion cu m (2004)

Current account balance:

$24.96 billion (2005 est.)

Exports:

$364.8 billion f.o.b. (2005 est.)

Exports - commodities:

motor vehicles and parts, industrial machinery, aircraft, telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity, aluminum

Exports - partners:

US 84.2%, Japan 2.1%, UK 1.8% (2005)

Imports:

$317.7 billion f.o.b. (2005 est.)

Imports - commodities:

machinery and equipment, motor vehicles and parts, crude oil, chemicals, electricity, durable consumer goods

Imports - partners:

US 56.7%, China 7.8%, Mexico 3.8% (2005)

Reserves of foreign exchange and gold:

$33.02 billion (2005 est.)

Debt - external:

$439.8 billion (30 November 2005)

Economic aid - donor:

ODA, $2.6 billion (2004)

Currency (code):

Canadian dollar (CAD)

Currency code:

CAD

Exchange rates:

Canadian dollars per US dollar - 1.2118 (2005), 1.301 (2004), 1.4011 (2003), 1.5693 (2002), 1.5488 (2001)

Fiscal year:

1 April - 31 March

 

Communications

Canada

Telephones - main lines in use:

18.276 million (2005)

Telephones - mobile cellular:

16.6 million (2005)

Telephone system:

general assessment: excellent service provided by modern technology
domestic: domestic satellite system with about 300 earth stations
international: country code - 1-xxx; 5 coaxial submarine cables; satellite earth stations - 5 Intelsat (4 Atlantic Ocean and 1 Pacific Ocean) and 2 Intersputnik ( Atlantic Ocean region)

Radio broadcast stations:

AM 245, FM 582, shortwave 6 (2004)

Radios:

32.3 million (1997)

Television broadcast stations:

80 (plus many repeaters) (1997)

Televisions:

21.5 million (1997)

Internet country code:

.ca

Internet hosts:

3,934,223 (2006)

Internet Service Providers (ISPs):

760 (2000 est.)

Internet users:

21.9 million (2005)

 

Transportation

Canada

Airports:

1,337 (2006)

Airports - with paved runways:

total: 509
over 3,047 m: 18
2,438 to 3,047 m: 15
1,524 to 2,437 m: 151
914 to 1,523 m: 248
under 914 m: 77 (2006)

Airports - with unpaved runways:

total: 828
1,524 to 2,437 m: 66
914 to 1,523 m: 355
under 914 m: 407 (2006)

Heliports:

319 (2006)

Pipelines:

crude and reined oil 23,564 km; liquid petroleum gas 74,980 km (2005)

Railways:

total: 48,467 km
standard gauge: 48,467 km 1.435-m gauge (2005)

Roadways:

total: 1,042,300 km
paved: 415,600 km (including 17,000 km of expressways)
unpaved: 626,700 km (2005)

Waterways:

631 km
note: Saint Lawrence Seaway of 3,769 km, including the Saint Lawrence River of 3,058 km, shared with United States (2003)

Merchant marine:

total: 173 ships (1000 GRT or over) 2,129,243 GRT/2,716,340 DWT
by type: bulk carrier 62, cargo 10, chemical tanker 9, container 2, passenger 6, passenger/cargo 63, petroleum tanker 13, roll on/roll off 8
foreign-owned: 7 (Germany 3, Netherlands 1, Norway 1, US 2)
registered in other countries: 111 (Australia 1, Bahamas 18, Barbados 8, Cambodia 6, Cyprus 2, Denmark 1, Honduras 1, Hong Kong 28, Liberia 2, Malta 18, Marshall Islands 6, Panama 4, Russia 1, Saint Vincent and the Grenadines 6, US 4, Vanuatu 5) (2006)

Ports and terminals:

Fraser River Port, Halifax, Montreal, Port Cartier, Quebec, Saint John's (Newfoundland), Sept Isles, Vancouver

 

Military

Canada

Military branches:

Canadian Forces: Land Forces Command, Maritime Command, Air Command, Canada Command (homeland security) (2006)

Military service age and obligation:

16 years of age for voluntary military service; women comprise approximately 11% of Canada's armed forces (2001)

Manpower available for military service:

males age 16-49: 8,216,510
females age 16-49: 8,034,939 (2005 est.)

Manpower fit for military service:

males age 16-49: 6,740,490
females age 16-49: 6,580,868 (2005 est.)

Manpower reaching military service age annually:

males age 18-49: 223,821
females age 16-49: 212,900 (2005 est.)

Military expenditures - dollar figure:

$9,801.7 million (2003)

Military expenditures - percent of GDP:

1.1% (2003)

 

Transnational Issues

Canada

Disputes - international:

managed maritime boundary disputes with the US at Dixon Entrance, Beaufort Sea, Strait of Juan de Fuca, and around the disputed Machias Seal Island and North Rock; working toward greater cooperation with US in monitoring people and commodities crossing the border; uncontested sovereignty dispute with Denmark over Hans Island in the Kennedy Channel between Ellesmere Island and Greenland

Illicit drugs:

illicit producer of cannabis for the domestic drug market and export to US; use of hydroponics technology permits growers to plant large quantities of high-quality marijuana indoors; transit point for ecstasy entering the US market; vulnerable to narcotics money laundering because of its mature financial services sector

 

This page was last updated on 12 December, 2006

 

INCORPORATION IN CANADA
INCORPORATING A BUSINESS IN CANADA

The Bottom Line for Business is Better in Canada
Are you a non-Canadian interested in doing business in Canada? Canada's open for business, and welcomes foreign investment and business immigrants.

Why do business in Canada? Why not? Operating a business in Canada is better for your bottom line than operating your business in the United States, and thanks to NAFTA (the North American Trade Agreement), you'll still have access to the entire North American market.

Currently, according to a detailed 10-month study of international business costs in 11 countries in North America, Europe and Asia-Pacific by KMPG, Canada's business costs are the lowest recorded in the study, and roughly 9 percent lower than in the USA after taxes depending on the industry.

One reason for this is the lower labour costs in Canada; total labor costs, including wages and salaries, statutory benefits, and other benefits, are lowest in Canada.

CANADIAN PROVINCES AND

TERRITORIES - KEY FACTS

 

Provinces and Territories
This page contains links to the official government Web sites of Canada's provinces and territories. Capital cities are in brackets.

For more provincial and territorial information, visit the About Canada section.
http://canada.gc.ca/acanada/acPubHome.jsp?lang=eng

Flag of Alberta

Alberta
( Edmonton)

Flag of British Columbia

British Columbia

( Victoria)

Flag of Manitoba

Manitoba
( Winnipeg)

Flag of New Brunswick

New Brunswick

( Fredericton)

Flag of Newfoundland and Labrador

Newfoundland and Labrador

( St. John's)

Flag of the Northwest Territories

Northwest Territories

( Yellowknife)

Flag of Nova Scotia

Nova Scotia

( Halifax)

Flag of Nunavut

Nunavut
(Iqaluit)

Flag of Ontario

Ontario
( Toronto)

Flag of Prince Edward Island

Prince Edward Island

( Charlottetown)

Flag of Québec

Québec
( Québec City)

 

 

Flag of Saskatchewan

Saskatchewan
( Regina)

Flag of the Yukon

Yukon
( Whitehorse)

 

DO BUSINESS IN CANADA
INCORPORATING IN CANADA

If you want to establish a business in Canada, your first decision will be which form of business to establish. Sole proprietorships, partnerships, cooperatives, franchises, joint ventures, and corporations are all legally recognized forms of business in Canada.

Most foreign companies choose to operate in Canada as corporations. If incorporating in Canada is your choice, you'll also need to decide whether to incorporate a subsidiary, or conduct your business in Canada directly, through a branch operation.

Subsidiaries and branches are treated differently in terms of taxes, the ability to raise capital, and the extent of the parent company's liability. Generally, a Canadian subsidiary may not be consolidated with other operations for foreign tax purposes, so establishing a branch operation may be beneficial to offset initial losses.

The next decision is whether to incorporate your company federally or provincially. If you incorporate federally, your business will be empowered to conduct business throughout Canada. Although your corporation will still be subject to provincial regulations, and will have to pay a license or registration fee in some provinces, no province will be able to prevent your company from conducting business under its corporate name.

A provincially incorporated company, on the other hand, may not be able to operate under the same name in another province, if another corporation with a similar name already exists in that province.

One disadvantage of federally incorporating your company is the required disclosure of financial records. A private corporation's financial statements must be made public if a federal corporation has gross revenues for a fiscal period in excess of $10 million, or has total assets in excess of $5 million as of the last day of any fiscal period. These gross revenues and total asset figures include those of affiliated companies and the parent company.

Also, to federally incorporate, the composition of your company's board of directors must meet the requirements of the Canada Business Corporation Act. Under this Act, a majority of the directors of a federally incorporated company must be resident Canadians, unless "a holding corporation earns in Canada directly or through its subsidiaries less than five per cent of the gross revenues of the holding corporation and all of its subsidiary bodies corporate together, then not more than one-third of the directors of the holding corporation need be resident Canadians"

Advantages to have a company in Canada
A Canadian company can be used to act on the behalf of offshore companies or can be used to receive and remit money to offshore companies to avoid withholding taxes in some countries (with the right structure and a clear contract there will have no income taxes or sale taxes to pay in Canada for companies used for those purposes)

Canada has a very good reputation around the world

A Canadian company can be used as nominee shareholder for other companies around the world

A Canadian company (not in all provinces) can have bearer shares

Canadian companies pay about 20% of income taxes, so the same rate than in Singapore for example.

Canada has a lot of tax treaties

Selecting a Business Structure
The right structure for your business will depend on a number of factors including legal considerations, the location of the business and taxation. Canada has three basic business structures:

Sole Proprietorship
Partnership
Corporation

In addition, there are variations of the basic business structures:

Joint-venture
Branch Office
Subsidiary

Sole Proprietorship in Ontario
Sole Proprietorship is the simpleast and the most inexpensive way to set up a small business in Ontario. One person performs all the functions required for the successful operation of the business.

The small business owner must register a business name with the province if it is different from his/her own name.

Ontario Business name registration is valid for 5 years.

Two or more persons could establish Ontario General Partnership.

It's important to know, an owner of the small business is fully responsible for his business debts and obligations by his personal assets. Thus, the business owner has unlimited personal liability.

Benefits of Sole Proprietorships

Easy and inexpensive to set up

Flexible with little regulation

Directly controlled by the owner/operator

Minimal working capital required

Business is taxed through owner's personal income tax, and losses can be used to reduce taxes on other sources of personal income

Wages payable to a spouse are deductible from the income of the business.

Disadvantages of Sole Proprietorships

Unlimited personal liability

Lack of continuity in business organization in absence of owner

Difficulty in raising capital

Owners are taxed at individual tax rate, which is much higher than corporate tax rate.

 

General Partnership in Ontario
Partnership is a simple and not expensive business structure. By carrying business for profit you and your partners create a partnership. You don't have to sign any agreement to create a partnership. A simple verbal agreement is enough to form it. But in order to protect partners in the event of a disagreement or dissolution of a partnership, a partnership agreement should be drawn up.

A partnership located in Ontario must register its business name with the province.
Ontario Business name registration is valid for 5 years.

In a General Partnership each partner takes responsibility and becomes personally liable for all the debts and obligations of the business. Thus, each partner has unlimited personal liability including liability for the actions of the other partners.

Benefits of General Partnerships
Easy and inexpensive to set up
Flexible with little regulation
New partners can be added easily
Risks are generally shared equally among partners
Minimal working capital required
Broader management base
Partners taxed on business earnings in proportion to their share
Business is taxed through partners' personal income tax, and losses can be used to reduce taxes on other sources of personal income
Wages payable to spouses are deductible from the income of the business.

Disadvantages of General Partnerships
Unlimited personal liability
Personal liability for the actions of the other partners (this includes actions that may be taken without partners' knowledge)
Lack of continuity in business organization
Difficulty in raising additional capital
Partners are taxed at individual tax rate, which is much higher than corporate tax rate.

Corporation
If you are interested to get a limited liability company protecting you from the personal liability for your business, you should consider incorporation.

The corporation is the most popular business structure in Canada. It is a separate legal entity and can enter into contracts and own property in its own name, separately and distinctly from its owners. Since a corporation has a separate legal existence, it has to pay tax on its income, and therefore must file its own income tax return.

A corporation can be created under two jurisdictions:

Under provincial law - If the business will operate in only one province, the company is incorporated provincially.
Under federal law - Companies that plan to do business across Canada must be incorporated under federal law and sometimes under provincial law. Some types of business, such as banks, are subject to industry-specific legislation.

Benefits of Incorporating

Separate Legal Entity
A corporation has the same rights and obligations under Canadian law as a natural person. A corporation can acquire assets, go into debt, enter into contracts, sue or be sued, and even in some situations be found guilty of committing a crime.

Limited Liability
Shareholders of a company are not liable for the company's debts. If the company goes bankrupt, then a shareholder will not lose more than his or her investment (unless the shareholder has provided personal guarantees for the company's debts). A creditor cannot sue shareholders for liabilities incurred by the corporation, even though shareholders are owners of the corporation.

Lower Corporate Tax Rates
A corporation is taxed separately from its owners and generally at a lower tax rate. For example, active private companies in Ontario pay a combined flat tax of less than half that of an individual in the highest tax bracket on the first $400,000 of taxable income.

Greater Access to Capital
Raising capital is often easier for corporations than for other forms of business. For example, corporations are entitled to issue bonds or share certificates to those who invest money in the company. Other forms of business must rely solely on their own money and loans for capital.

Corporations often are able to borrow capital at a much lower rate than other forms of business. This is because financial institutions and other sources of financing perceive loans to corporations as being less risky investments.

Continuous Existence
Unlike a partnership or sole proprietorship, a corporation does not cease to exist upon the death of its owners. Ownership would transfer to the shareholders' heirs, and the corporation would still live on. This assurance of continuous existence gives a business greater stability, allowing it to carry out planning over a longer term and to obtain more favourable financing terms.

What are the types of corporations?
In Canada there are three different variations to a "Limited Liability" company. All three have the same rights and restrictions. The difference is in the names.

A named company is incorporated with a name selected by the owner. In order to incorporate a named company you are required to perform a search of the name to confirm it is available. Incorporate a Named Company.

A numbered company is incorporated with a Number as its name. The number is assigned by the Province where the company is incorporated. Incorporate a Numbered Company.

A professional corporation is a special form of incorporation for selected professionals such as doctors, lawyers, accountants etc. Incorporate a Professional Corporation.

Joint Venture
A joint venture exists when two or more people agree to contribute goods, services or capital to one business enterprise. Canada has no specific laws governing joint ventures. Currently, joint ventures are governed by the contract between the parties involved.

A joint venture contract should outline the terms of collaboration. It defines the contributions of everyone involved, the management structure and the sharing of profits. A lawyer can provide legal help with your joint venture. You can also contact us for assistance.

What is a joint venture? How is a joint venture different from a partnership, for taxation purposes?
The term "joint venture" describes any arrangement whereby two or more persons or entities agree to contribute goods, services or capital to a common commercial enterprise. It is generally regarded as a more informal and temporary relationship than a partnership. Each co-venturer maintains the ownership of the property and is not held under joint tenancy and tenancy in common. Co-venturers do not act as agents for each other. Each co-venturer receives a share of the gross profits and shares only in the expenses related to the specific project, therefore they do not operate a "business in common." The profits of the joint venture flow through to the co-venturers and are taxed according to its business structure.

A joint venture has different tax rules from a partnership, for example:

Unlike partnerships, joint ventures are not subject to at risk rules.
Capital Cost Allowance (CCA) treatment
A partnership calculates CCA at the partnership level. In a joint venture, co-venturers may claim as little or as much as suits their situation.
Unlike partnerships, joint ventures do not have to file information returns.

Branch Office
A foreign incorporated enterprise may decide to establish a branch office because of some of the unique tax benefits related to this business structure. Before a foreign company can open a branch office it must obtain a licence or otherwise register in the province(s) where the branch office will “carry on business”.

Can a foreign corporation conduct business in Canada through a branch operation?
Yes, a non-resident foreign corporation may conduct business in Canada through a branch office, as long as Canadian foreign investment regulations, provincial/territorial registration and licensing requirements are fulfilled.

Branch offices may be used in certain instances because of some tax advantages that the foreign corporation may enjoy. Carrying on business or conducting investment activities through a branch office allows a foreign corporation to offset losses incurred in the Canadian branch against taxable profits earned by the corporation from other sources in other jurisdictions. An examination of the applicable foreign tax law should be done to determine the corporation's opportunities for such income tax offsets. This may be particularly important for start-up operations or during reorganizations when losses may be expected.

However, because the branch office is not an entity that is legally distinct from the foreign parent corporation, the parent company remains liable for the debts, liabilities and obligations of the Canadian branch operation. The use of a branch would also directly subject the foreign corporation to Canadian provincial and federal laws.

Subsidiary
A foreign corporation can expand into Canada by incorporating a separate subsidiary corporation under Canadian Federal laws or any of the provincial statutes governing corporations. Subsidiaries are treated the same as a branch operation. A business licence or registration may be required from any province where the company carries on business.

Individuals who are not residents of Canada CAN NOT register a Trade Name, however, both non-resident individuals and corporations can register their existing corporation in Canada or form a new "Canadian Presence" Corporation.

Directors’ Residency Requirements
When deciding where to incorporate your business, you must also consider the directors’ Canadian residency requirement of each jurisdiction. This will be particularly important for foreigners starting a business in Canada. If these requirements are not met, you cannot incorporate in that jurisdiction.

These are the current residency requirements for each Canadian jurisdiction:

Jurisdiction

Director's Residency Requirement

Federal

at least 25% must be resident Canadians

Alberta

at least 50% must be resident Canadians

British Columbia

None

Manitoba

at least 51% must be resident Canadians

New Brunswick

None

Newfoundland

at least 51% must be resident Canadians

Nova Scotia

None

Ontario

at least 51% must be resident Canadians; however, if there are only 2 directors then only 1 must be a resident Canadian

Prince Edward Island

None

Quebec

None

Saskatchewan

at least 51% must be resident Canadians; at least one director must be ordinarily resident of Saskatchewan

 

Registering your existing corporation in Canada.
If your existing Company is currently active and in good standing in any jurisdiction anywhere in the world outside of Canada, then you can register this company in Canada.

Registration of your existing company in Canada is called an Extra Provincial (Ex-Pro) registration. An Ex-Pro gives you all the same rights and privileges of any other company incorporated in Canada.

Extra-Provincial Registration of Non-Resident Corporations
Our highly experienced company assists non-resident corporations with Extra-Provincial Registration.

Eurofinanzza facilitates the process of registration of your corporation in Ontario


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