| Canada is an English
speaking Commonwealth country in which an English legal system applies.
Canada is not generally perceived as a place in which it is possible to
establish a non-resident, non-tax paying type of company and therefore
the Canadian non-resident company provides a very low profile and extremely
useful tax planning vehicle.Canadian law treats all companies incorporated
in Canada as resident for tax purposes and taxable on worldwide income.
In addition any company, wheresoever incorporated, which is controlled
and managed from Canada is also treated as Canadian tax resident and taxable
on worldwide income. These facts would seem to preclude the possibility
of establishing a non-taxable company in Canada but certain Canadian provinces
have corporate statutes which provide for the continuation of existing
foreign corporations in Canada and a Canadian non-resident company can
thereby be established by taking a foreign company, registering that company
in Canada and ensuring that the central management and control of that
company takes place outside Canada.Under these circumstances the company
would be deemed by the Canadian tax authorities to be neither incorporated
nor managed and controlled from Canada and not therefore subject to Canadian
taxation on non-Canadian source income. One of the provinces within Canada
which allows for such entities to be established is Alberta where extra-provincial
registrations may be achieved under the Business Corporations Act.
Canadian non-resident company structure .A TCI company
which has been continued in the province of Alberta has the following characteristics:
TAXATION
Provided that the continued Canadian corporation is managed
and controlled from outside Canada then only Canadian source income would
be taxable in Canada i.e. as long as the activities of the company took
place outside of Canada and no Canadian source income was thereby generated
then such a corporation would not be subject to Canadian tax.
SHARE HOLDERS
The corporate structure would follow that of the place
of incorporation of the original company and therefore if a TCI company
was used only one shareholder would be required.Details of the shareholders
would not appear on public file in TCI but would appear on the public file
in Canada.However, confidentiality can be retained by issuing shares to
bearer or by using nominee shareholders.
DIRECTORS
Again the structure of the company follows the original
incorporation and with a TCI company only one directories required.Details
of the directors do not appear on the public file in TCI but do appear
on the public file in Canada. Therefore, confidentiality can only be retained
by appointing third party directors.
ANNUAL REPORTING
Tax returns in Canada would have to be filed even if
they showed that no Canadian source income had been generated and therefore
no tax was payable. Accounts need to be prepared and accounting records
maintained at the Canadian office of the company although companies with
assets of less than 5 Million Canadian Dollars do not need to have their
accounts audited.
TIMESCALE
It will take around six weeks for the whole registration
process to be completed however a small number of shelf companies which
have been pre-registered are normally available through these offices.
RESTRICTIONS ON NAME AND ACTIVITY
Names must not be misleading or denote any connection
with the Canadian authorities or British Crown. Names containing words
such as "Insurance" or "Bank" would require prior authorisation and proper
licences to be obtained before they could be used.
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