Incorporate in Canada as a Non-Resident: Province, BN, Filings

Can a non-resident open a company in Canada?

Yes. A person who lives abroad can incorporate a Canadian corporation and own all of its shares. Federal law lets any individual who is at least 18, not bankrupt and not found incapable incorporate; where the person lives is not a condition (CBCA, section 5). Residence rules apply to two other things: the board and the address.

• Directors: a federal corporation with fewer than four directors needs at least one resident Canadian director (CBCA, section 105). Ontario, British Columbia and Alberta have no director residency rule, so a founder abroad can be the only director there. Who counts as a resident Canadian is covered in incorporating as a newcomer or non-resident.
• Address: every corporation needs a registered office at a physical address in its province of incorporation. A foreign home address cannot serve.

The setup is the easy part. Three things make an owner-abroad corporation harder than a local one: its board may make decisions in another country that can also claim it as a tax resident; money paid to you abroad can carry Canadian withholding and slips; and a corporation controlled by a non-resident is generally not a Canadian-controlled private corporation, so it does not get the small business rate. Your own country's tax on the company and on what it pays you needs advice there. Whoever sits on the board, abroad or in Canada, can be personally liable with the corporation for payroll deductions, GST/HST and the tax withheld on payments to a non-resident owner that it fails to remit, for up to two years after leaving the board (Income Tax Act, section 227.1; Excise Tax Act, section 323).

Gather before you file:

• Each director's full name, address for service and resident Canadian status (the federal form asks for all three).
• A physical address in the province for the registered office, and a person there who will receive documents.
• The share structure and who will own and control the shares.
• A numbered name, or a word name with the name search the province requires.
• Where the board will meet and decide, and the year-end you want.

Which province works if no director lives in Canada?

Ontario, British Columbia and Alberta let a founder abroad be the sole director; federal incorporation does not. The table compares the four routes most foreign founders weigh.

A provincial corporation that later carries on business in another province registers there too; the trade-offs are in federal or provincial incorporation. A Quebec corporation does not receive a business number with incorporation and files a second income tax return each year; see how to incorporate in Quebec. Total setup and yearly costs are in the cost to incorporate in Canada.

Where must the registered office and records be?

The registered office must be a physical address in the province of incorporation where legal documents can be delivered and someone receives them. Corporations Canada warns that documents sent to the registered office are legally assumed to have been received by the corporation (how to incorporate), so an unattended address can let a notice or deadline pass unseen. A founder with no premises there needs a person or business in the province that agrees to receive documents for the corporation at that address.

• Federal: the office stays in the province named in the articles (CBCA, section 19). Corporate records are kept there or at another place in Canada the directors choose; they may be kept abroad only if they can be inspected electronically from that place in Canada, subject to tax law (section 20).
• Ontario: the office must be in Ontario (section 14), and the corporate records are kept there or elsewhere in Ontario (section 140).
• British Columbia: both the registered office and the records office need a BC delivery address that is not a post office box and is open to the public from 9 a.m. to 4 p.m. on business days (BC registry). The registry mails annual report reminders and any dissolution notice to the registered office.
• Alberta: the registered office and records address must be physical locations in Alberta, and the corporation appoints an agent for service who is a resident Albertan, consents to act and uses an office open to the public during normal business hours (Alberta; Alberta Act, section 20.1).

Tax records follow a separate rule. The Income Tax Act requires books and records at a place of business or residence in Canada, unless the CRA designates another place. The CRA says records kept outside Canada and accessed electronically from Canada are not records kept in Canada, so books in an online system abroad can meet the corporate-law rule above yet fail the tax rule. To keep them abroad, write to your tax services office; its written permission sets the terms, and the records must still be made available in Canada on request.

Can I incorporate from abroad online?

Federal, Ontario and BC incorporations can be filed online; Alberta goes through an in-province service provider.

• Federal: file and pay through Corporations Canada's Online Filing Centre. An online word name needs no separate name search report (fees page).
• Ontario: file in the Ontario Business Registry, which prompts you to create an Ontario.ca Login and an Ontario Business Account if you have none.
• British Columbia: apply through Corporate Online or the BC Business Registry; if you cannot file online, a law firm or registry agent can submit paper forms (BC).
• Alberta: take the forms, name search report, valid ID and payment to a registry agent or authorized Alberta service provider (Alberta). The Alberta page describes no self-service online route.

Filing online does not replace the local pieces: the office address, and in Alberta the agent for service, must be real before you file. Province-by-province steps are in the guides for Ontario, British Columbia and Alberta.

How does the corporation get its business number?

Usually it gets one automatically. The CRA issues a business number and corporation income tax account with a federal incorporation and with incorporation in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan. A corporation formed in Quebec, Newfoundland and Labrador, the Northwest Territories, Nunavut or Yukon registers separately.

Check the certificate, cover sheet or email for the business number first; registering again is a common mistake. The CRA's non-resident business registration is for a business incorporated or located outside Canada, or a person registering who has no social insurance number or one starting with 0; a corporation that received its number at incorporation does not need it. If none came, as with a Quebec corporation, see incorporating as a newcomer or non-resident for registering without a social insurance number. Adding GST/HST or payroll accounts and getting online access are covered in after you incorporate.

Does the corporation need a GST/HST number from day one?

Not unless it chooses to register early. The corporation must register once it makes taxable sales in Canada and is no longer a small supplier: its worldwide taxable sales, counted with those of associated businesses, pass $30,000 in one calendar quarter or over four consecutive quarters (CRA). Associated businesses can include another company the founder controls abroad. It may register voluntarily before then.

For GST/HST, a corporation incorporated in Canada is deemed resident in Canada (Excise Tax Act, section 132), so the registration rules for foreign and digital sellers describe a business outside Canada, not this corporation.

Where is a Canadian corporation owned from abroad taxed?

In Canada, on its worldwide income: a corporation incorporated in Canada after April 26, 1965 is deemed resident in Canada (Income Tax Act, section 250), and a resident is taxed on income from sources inside and outside Canada (sections 2 and 3). The founder's country may also claim it. The CRA explains that, under common law, a corporation is resident where its central management and control is exercised, usually where the board meets.

If the board meets and decides abroad, the corporation can be resident in both countries. Where a tax treaty applies, its residence article governs: the CRA says tie-breakers generally treat a dual-resident corporation as resident where it was created, so a Canadian corporation usually stays Canadian for treaty purposes while the other country may still tax it under its own law. Some treaties leave the answer to agreement between the two tax authorities. Only if a treaty makes the corporation resident in the other country does Canada deem it not resident (section 250(5)). This turns on facts and on the treaty with your country; see corporation residency when the owner is abroad.

Control matters too. A corporation controlled directly or indirectly by non-residents is not a Canadian-controlled private corporation (CRA), which generally rules out the small business rate; see non-resident owners of a Canadian corporation.

What does the corporation file in Canada in year one, even with no income?

A resident corporation files a T2 for every tax year, even if it owes no tax and was inactive (CRA). The registry's annual return is a separate filing. Its first tax year starts at incorporation and cannot run more than 53 weeks (section 249.1). Tax owed is due earlier than the return: a corporation controlled by non-residents is not a Canadian-controlled private corporation, so any balance is due two months after its year-end (Income Tax Act, section 248(1), "balance-due day").

A corporation with no sales and no payments to anyone still owes the T2 and the annual return. Missing the annual return can lead to dissolution; see corporate annual return. If years have already been missed, see a non-resident-owned corporation that never filed.

How do I take money out of the corporation while living abroad?

Dividends, salary, director's fees, interest and loans to an owner abroad each follow different Canadian withholding and reporting rules, and your own country may tax the same payment; see non-resident owners of a Canadian corporation.

Example

Illustrative Canadian dollars only.

A consultant in Dubai incorporates in Ontario

A consultant living in Dubai incorporates in Ontario as the only director, which Ontario allows. The registered office is a staffed Toronto business address that accepts documents for the corporation. The business number arrives with incorporation, so no separate CRA registration is needed. Within 60 days it files its Ontario initial return. The corporation chooses 31 December as its year-end. It makes no sales before that date, yet its first T2 is still due by 30 June of the following year, and its Ontario annual return falls within the same six months. Because every decision is made in Dubai, the consultant also checks whether UAE law taxes the corporation; under Canada's treaty with the UAE, only a company incorporated there can be a UAE resident, so the corporation stays Canadian for treaty purposes. The consultant also checks how Canada would tax a later dividend paid to them.

Two founders in Germany incorporate in BC

Two founders living in Germany incorporate in British Columbia to sell software to Canadian clients. They arrange registered and records offices in BC that are open on business days. It has no associated businesses. Taxable sales are C$12,000 in the first calendar quarter, C$14,000 in the second and C$9,000 in the third. The running total passes C$30,000 during the third quarter (C$35,000). The corporation stays a small supplier until the end of the month after that quarter; its registration takes effect no later than its first sale after that, and it must register within 29 days after that sale. Because both founders make every decision from Germany, they also check whether Germany treats the corporation as its resident.

A founder in Brazil tries to incorporate federally alone

A founder living in Brazil starts a federal incorporation as the only director. The federal law requires at least one resident Canadian director on a board of fewer than four, so the filing cannot proceed as planned. The founder either adds a qualifying resident Canadian director, who takes on real director duties, or incorporates in Ontario, BC or Alberta instead.

Different for you?

• The corporation needs a Canadian bank account, you need to know who counts as a resident Canadian director, or you will move to Canada: see incorporating as a newcomer or non-resident.
• The company will pay you or another owner abroad: see non-resident owners of a Canadian corporation.
• The board will meet and decide outside Canada: see corporation residency when the owner is abroad.
• A company, not a person, will own the Canadian corporation: see a Canadian subsidiary of a foreign company, or a US business expanding into Canada for a US parent.
• You live in mainland China: see a Canadian company for a China-resident founder.
• You want to sell into Canada without a Canadian company: see GST/HST for non-resident and digital sellers.
• The corporation already exists and has missed T2s or annual returns: see a non-resident-owned corporation that never filed.
• You will keep the books yourself from abroad, or in a system outside Canada: the tax records rule above applies from the first transaction; see bookkeeping help.
• You will run the company from another country, pay yourself from it, or both: the choice of jurisdiction, the board and the first-year filings affect each other. Gather the directors' details, the planned office address, the share structure, where decisions will be made and how you plan to be paid, then get business formation help.