9 How is corporate residency determined in Canada? Why is it relevant?
Masood Abdullah
Deemed non-resident
According to the Income Tax Act (ITA) Subsection 250(5), a corporation which would be resident of Canada, is deemed to be non-resident if it is considered to be resident in another country based on the tax treaty rules between Canada and the other country.
Common-law
- Place where the principal business is done
- Books and records are present
- Bank accounts maintained and kept
- Company seal is present
- Residence of the directors.
- It is to be noted that International Tax Treaties override the ITA.
The tiebreaker rules in tax treaties will consider the corporation to be resident of the country where it has continued to operate rather than the country where it was incorporated.
Part year resident
Note that the concept of part-year residency (which may be applicable to individuals) is not relevant to corporations. When a corporation is considered resident in Canada it is considered to be resident for the entire year.
Interactive content (Author: Simran Gill, January 2020)
References and Resources:
- Income Tax Act (ITA) 248(1), 250(4), 250(5), 250(5.5)
- Article – “Residency of a corporation” (Author: Government of Canada)
January 2020