Residency of Corporations

Residency of Corporations

Determining Whether a Corporation is Resident in Canada

Under Canada’s domestic tax law, a corporation is deemed to be resident in the country

  1. Where central management and control of the corporation reside
    • For example: if the board of directors all live and work in Toronto, then the corporation will be considered a Canadian Resident
  2. If the corporation is incorporated in Canada after April 26, 1965, the corporation is automatically deemed to be a Canadian resident corporation

Even if a company was incorporated in the US in 2004, and whose management and shareholders reside in Toronto, then the corporation is a Canadian resident under Canada’s domestic income tax law. However, there are exemptions to this general rule in the tax treaty. For instance, if a corporation is a resident of both Canada (central management and control) and the US (incorporation), the treaty deems the corporation to be a resident of the U.S. by virtue of being incorporated under U.S. laws. 

 Non-Resident Corporations are liable for Canadian source income from:

♦ Business
♦ Capital Gains on the disposal of “Taxable Canadian Properties”

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