Canada company formation for non-residents

Why founders form a company in Canada

Canada suits founders who want an operating North American business. A Canadian corporation can sign contracts with local customers, hire staff and hold a Canadian bank account.

It also brings Canada's tax treaty network. That matters if your group pays or receives dividends, interest or royalties across borders.

The trade-off is tax. Canada taxes resident corporations on worldwide income at full onshore rates, so it fits trading and operating businesses better than passive holding structures.

Canada is a poor fit if you want a low-cost holding company with no local ties, or if no director can meet the residency rule and a provincial route does not work. In those cases we show you alternatives, such as a US LLC or a Hong Kong company, with running costs side by side.

Federal or provincial incorporation

You can incorporate federally under the Canada Business Corporations Act or in a single province. A federal corporation has name protection across Canada and can operate in every province after it registers there.

Registering in a province is a separate step, called extra-provincial registration. We file it where your company will carry on business, often Ontario, British Columbia or Quebec.

The main difference for non-residents is the director rule. The CBCA requires resident Canadian directors, while some provinces do not: Ontario, for example, repealed its rule on 5 July 2021. We compare both routes before you pay.

Directors, shareholders and the resident rule

A federal corporation needs at least one director. Under section 105(3) of the CBCA, at least 25% of directors must be resident Canadians, and a corporation with fewer than four directors needs at least one.

Shareholders can be of any nationality, and one shareholder is enough. Corporate shareholders are allowed.

If you do not have a Canadian-resident director, tell us at the start. We explain the options, including a provincial corporation, so you do not pay for a structure that cannot be filed.

Corporate tax in Canada

The federal general corporate rate is 15% after the general tax reduction. Each province adds its own rate. In Ontario the general rate is 11.5%, which gives a combined rate of about 26.5%.

The 9% federal small business rate applies only to Canadian-controlled private corporations. A company controlled by non-residents usually does not qualify, so plan on the general rate.

Every Canadian corporation files a T2 return with the CRA, normally within six months of its year-end. Dividends paid to non-resident shareholders attract withholding tax, which a tax treaty may reduce.

Sales tax is separate. A business that makes taxable sales in Canada may need to register for GST/HST once it passes the small supplier threshold, and some provinces add their own sales tax. We flag this when we review your business model (confirm with your specialist).

• Federal general rate: 15%
• Federal small business rate: 9% (Canadian-controlled private corporations only)
• Ontario general rate: 11.5%
• T2 return: due within 6 months of the tax year-end

Registers and transparency

Corporations Canada publishes each federal corporation's directors and registered office. Since 22 January 2024, corporations also file information about their individuals with significant control.

An individual with significant control is anyone who owns or controls 25% or more of the shares or votes, or who has direct or indirect influence over the company. Some of this information is public, but an address for service can replace a home address.

You must update the ISC register at least once a year and file changes within 15 days. We keep the register and send the filings for you.

Shareholder registers and ISC records are also shared with authorities on request, including the police and the CRA. Plan on full disclosure to the government; the privacy you get is within the law, mainly the option to keep a home address off the public record.

What running the company involves

Each year you file an annual return with Corporations Canada within 60 days after your anniversary date, together with the ISC information. Provinces where you registered may ask for their own annual return.

You prepare annual financial statements. An auditor is required unless all shareholders of a non-distributing corporation agree in writing not to appoint one.

Corporate records, including the minute book, by-laws and registers, stay at the registered office or another place in Canada the directors choose. The CRA also expects books and records to be kept in Canada, generally for six years after the tax year they relate to, unless it agrees otherwise. We keep the minute book and remind you when each filing is due, so nothing slips when you are busy running the business.

Banking is the step that takes most planning. We introduce you to suitable banks or payment institutions and prepare the application. The bank decides, and a Canadian director or address usually helps.

How we set up your Canadian corporation

The work starts with two decisions: federal or provincial, and who the directors will be. Once those are settled, the filing itself is quick. Corporations Canada accepts articles of incorporation online and usually issues the certificate within 1–3 business days of a complete filing.

Before filing, we run a name search. A federal name needs a search report unless you choose a numbered company, such as 1234567 Canada Inc. A numbered name is faster and can be changed later by filing articles of amendment.

After the certificate is issued, we prepare the by-laws, issue the shares and open the statutory registers, including the ISC register. We then help you obtain a CRA business number, which you need for tax accounts, payroll and GST/HST registration if your sales require it.

• Name search or numbered name
• Articles of incorporation filed with Corporations Canada
• By-laws, share issuance and registers
• CRA business number and tax accounts
• Extra-provincial registration where you operate