The residency status of a corporation is very different when compared to residency status for individuals. For individuals residency status is based on ties to Canada, for corporations any corporation incorporated in Canada after April 26, 1965 is deemed to be a resident of Canada.
Since residents of Canada are taxed on their worldwide income all corporations incorporate in Canada after 1965 must pay taxed on their worldwide income.
For corporations that were not incorporated in Canada, under common law rules they can still be considered a resident of Canada if its central management control is in Canada.
A corporation is considered to have central management control in Canada if the board of director meets in Canada then the corporation is deemed to be a resident of Canada.
Non-resident corporations
Non-resident corporations doing business in Canada are taxed on their Canadian sourced income. However, corporations that are residents of countries which have a tax treaty with Canada, under most tax treaties they only have to pay tax on their Canadian sourced income if they have a permanent establishment in Canada.
A foreign corporation is considered to have a permanent establishment in Canada if it has an office or branch in Canada or if the corporation has employee (not a sub-contractor) who has and authorizes the authority to conclude contracts (finalizing contracts) on behalf of the corporation.
For foreign corporations that do not have a permanent establishment in Canada file a treaty based return, which refunds the 25% withholding tax which is withheld when normally conducting business with a non-resident corporation.
Disclaimer
The information provided on this page is intended to provide general information.
GTA Tax Help 