Canada Federal Corporation
Canada
Canada offers federal corporations (incorporated under the Canada Business Corporations Act) and provincial corporations (under each province's act). Federal incorporation provides national name protection and operating rights across all provinces. The combined federal + provincial tax rate ranges 23-31% depending on province (Alberta lowest at 23%; Ontario, Quebec, BC ~26-27%). The Canadian-Controlled Private Corporation (CCPC) regime provides a small business deduction reducing the rate to ~12.2% on the first CAD 500,000 of active business income — but only for corporations majority-controlled by Canadian residents. Until November 2024, federal corporations required 25% Canadian-resident directors; the November 2024 reform removed this requirement under CBCA, materially easing non-resident-owned federal incorporation. Provincial requirements still vary (Ontario, Quebec retained Canadian-director rules; BC, Alberta did not).
Formation Details
- Setup Time
- 2 days
- Setup Cost
- $200
- Annual Cost
- $1,800
- Corporate Tax
- 15% federal + 8-16% provincial = ~23-31% combined depending on province (Ontario 26.5%, Alberta 23%, Quebec 26.5%)
- VAT Threshold
- $22,000
- Nominee Directors
- Not allowed
- Public Register
- Yes
- Residency Required
- Federal corporations: at least 25% of directors must be Canadian residents (no longer a requirement after the November 2024 federal reform — confirm with Corporations Canada at filing).
- Banking Difficulty
- Moderate
Economic Substance Requirements
- Physical Office
- Not required
- Local Director
- Not required
- Minimum Staff
- —
- Annual Local Spend
- —
Post-November 2024 reform: federal CBCA corporations no longer require 25% Canadian-resident directors. Registered Canadian address required (can be registered agent). Provincial requirements vary — Ontario and Quebec retained 25% Canadian-resident director rules. CCPC small-business-deduction regime requires majority Canadian-resident control to access the reduced rate.
Annual Maintenance Breakdown
Typical recurring costs after formation. Most jurisdictions have additional variable costs (accounting fees, professional tax prep, statutory audits) not shown here.
| Item | Annual Cost (USD) | Notes |
|---|---|---|
| Annual return (Federal) | $30 | CAD 40 annual return fee to Corporations Canada. |
| Provincial extra-provincial registration (where operating) | $200 | CAD 200-400 per province where company operates extra-provincially. |
| Registered office service | $400 | CAD 500-800/yr. |
| Accountant + CRA T2 filings | $2,200 | CAD 2,500-5,000/yr depending on complexity. |
Banking Pairing Recommendations
Providers commonly used with this entity type for business banking.
US Person Considerations
Canadian corporations owned by US persons are CFCs (under US rules) and FAPI may apply on passive income. Canadian dividends paid to US persons subject to 15% Treaty withholding (5% for substantial interest). The US-Canada tax treaty is one of the most extensive globally. Canadian capital gains exemption (LCGE) does not apply to US persons.
Other Jurisdictions
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