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The economy of Canada is a highly developed market economy that offers good business incorporation\registration opportunities. It is the 10th largest GDP by nominal and the 16th largest GDP by PPP in the world. As with other developed nations, the country's economy is dominated by companies registered in the service industry which employs about three quarters of Canadians. Canada has the fourth highest total estimated value of natural resources, valued at US$33.2 trillion in 2016. It has the world's third largest proven petroleum reserves and is the fourth largest exporter of petroleum. It is also the fourth largest exporter of natural gas. Canada is considered an "energy superpower" due to its abundant natural resources and a small population of 37 million inhabitants relative to its land area.
Start a Business in Canada Without Living in Canada
If you do not immigrate to Canada and are not a Canadian citizen or a landed immigrant (have permanent resident status), you can still incorporate a business in Canada. The important thing to understand is that the rules about who can and who can't register businesses are determined by Canada's individual provinces and are different from province to province (or territory).
For instance, currently, the province of British Columbia (B.C.) has the most flexible rules regarding non-resident businesses. In that province, anyone can start a sole proprietorship, partnership or corporation whether they're a Canadian citizen or not.
To register a business in Canada, you need to:
Then you're ready to follow the necessary steps to incorporate your new small business in Canada. It is compulsory to comply with the process of registering a business name in Canada, in order to be able to set up your business and start working.
If you want to incorporate a business in any other province or territory, you will have to check on their particular registering requirements. If they do not allow non-Canadians to begin the company formation process you desire, you might set up a partnership or a corporation with one or more Canadian citizens or registered immigrants.
Canada is a federation comprised of ten provinces and three territories. Legal authority is divided between the federal and provincial or territorial governments, although jurisdiction overlaps in some areas. The legal system is based on the English common law, with the exception of the province of Québec, which has a civil law system.
Canada has a significant body of common law relating to the rights of Aboriginal peoples. This includes the government's duty to consult with and, if required, accommodate the interests of Aboriginal peoples when it has real or constructive knowledge of the potential existence of an aboriginal or treaty right and is contemplating actions that may adversely affect it. The duty to consult rests solely with the government, but procedural aspects of this duty can be delegated to third parties. This allows the government to rely on industry consultations with Aboriginal peoples to assist in determining whether the duty to consult is triggered.
What grants or incentives are available when registering a company in Canada?
The federal government provides investment incentives in many company formation areas. Business assistance is generally in the form of repayable loans, tax credits, tax rebates and technical and marketing support for business incorporation.
Grant and incentive programmes focus on registered businesses in the areas of:
Provincial and territorial government incentives are also available for all registered companies.
The federal government also supports business incorporation through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). BDC provides direct and indirect financing, venture capital, growth and business transition capital, and consulting services to company formation entrepreneurs. EDC provides insurance services, financial services, bonding products and other small business services to Canadian exporters and investors and their international buyers.
Two significant federal government incentives are the Scientific Research and Experimental Development (SR&ED) programme and the Strategic Innovation Fund (SIF). SR&ED provides tax credits and/or a reduction of taxes payable on eligible research and development work done in Canada. SIF allocates repayable and non-repayable contributions to large-scale industrial and technology projects with a program budget of Can$1.26 billion over five years.
Many of the programmes listed above can be accessed by both domestic and foreign investors. Foreign investors involved in international trade may also benefit from some of Canada's tax and duty exemptions for business incorporation that create a regime somewhat similar to foreign trade zones.
In what circumstances is an employee taxed in your registered jurisdiction and what criteria are used?
For tax purposes, residence is determined by either:
An individual is considered a resident of the Canadian province where he resided on 31 December of that particular tax year.
What income tax and social security contributions must be paid by the employee and the employer during the employment relationship?
An individual who is a resident in Canada is (see Question 16) during a tax year is subject to the following taxes on his or her worldwide income from all sources:
Federal income tax. Federal income tax rates in 2019 are:
Provincial income tax. Provincial income tax rates and tax brackets vary by province. The combined federal and provincial top marginal tax rates, including any surtaxes, of the four largest provinces for 2019 are as follows:
Canada Pension Plan and Québec Pension Plan. For 2019, the employee contribution rate is 5.1% of salary earned in the year (5.55% for the Quebec Pension Plan), greater than Can$3,500 and less than or equal to Can$57,400.
Employment insurance. For 2019, the employee contribution rate is 1.62% of salary earned in the year, less than or equal to Can$53,100.