Canada has a well-defined legal framework governing businesses and corporations, and it provides various types of business entities for entrepreneurs and investors. The primary federal law that governs corporations in Canada is the Canada Business Corporations Act (CBCA). Additionally, each province and territory in Canada has its own laws regulating businesses. Here's an overview of the provisions, types of business entities, incorporation procedure, applicable forms, required documents, fees, and taxation under Canadian company law:

Provisions of Canada Company Law:

The Canada Business Corporations Act (CBCA) is the federal law that governs the incorporation, organization, and operation of federal business corporations in Canada. Key provisions include:

1. Types of Corporations: The CBCA allows for the incorporation of various types of corporations, including public, private, and not-for-profit corporations.
2. Shareholder Rights: The Act outlines the rights and responsibilities of shareholders, including voting rights, dividends, and financial disclosure.
3. Directors and Officers: It sets out the duties and liabilities of directors and officers of the corporation.
4. Corporate Governance: The CBCA provides rules for corporate governance, including the conduct of meetings and record-keeping.

Types of Business Entities in Canada:

1. Federal Corporation: Governed by the CBCA, these corporations can operate across Canada.
2. Provincial Corporations: Governed by provincial or territorial laws, these corporations are generally limited to operating within the specific province or territory.
3. Sole Proprietorship: A business owned and operated by one person. There is no legal distinction between the owner and the business.
4. Partnership: A business structure involving two or more individuals or entities who share profits, losses, and responsibilities.

Procedure of Incorporation under Canada Company Law:

Incorporating a company in Canada typically involves the following steps:

1. Name Search and Reservation:
   • Choose a unique name for the corporation and conduct a name search to ensure its availability.
   • File a name reservation request with the appropriate provincial or federal authority.
2. Prepare Articles of Incorporation:
   • Draft and prepare the Articles of Incorporation, which outline the corporation's name, registered office, share structure, and purpose.
3. Appoint Directors:
   • Appoint at least one director for the corporation. In some provinces, you may need to appoint Canadian resident directors.
4. Share Structure:
   • Determine the number and classes of shares the corporation will issue.
5. File Incorporation Documents:
   • Submit the Articles of Incorporation, along with any required documents and fees, to the relevant government authority.
6. Receive Certificate of Incorporation:
   • Once approved, you will receive a Certificate of Incorporation, confirming the corporation's legal existence.
7. Business Number (BN):
   • Register for a Business Number (BN) with the Canada Revenue Agency (CRA) for tax purposes.

Forms, Documents, and Fees:

The specific forms, documents, and fees required for incorporation can vary by province and territory. Generally, you will need to submit the following:

• Articles of Incorporation or equivalent document.
• A NUANS name search report (for federal corporations and some provinces).
• Details of directors and officers.
• Share structure information.
• Registered office address.
• Applicable fees, which can vary widely depending on the jurisdiction.

Taxation under Canada Tax Laws:

Canada has a complex tax system, and businesses may be subject to various taxes, including:

1. Corporate Income Tax: Corporations are subject to federal and provincial/territorial income taxes on their profits. The federal corporate tax rate is applied to taxable income, and provinces and territories have their own rates.
2. Goods and Services Tax (GST)/Harmonized Sales Tax (HST): GST and HST are consumption taxes levied on most goods and services in Canada. Businesses are required to collect and remit GST/HST, which can vary by province.
3. Payroll Taxes: Employers must deduct and remit payroll taxes, including Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums, from employees' wages.
4. Dividend Tax Credit: Individuals receiving dividends from Canadian corporations may be eligible for a dividend tax credit.
5. Small Business Deduction: Certain Canadian-controlled private corporations may be eligible for a small business deduction, which reduces the corporate tax rate on active business income.

To understand and comply with tax obligations specific to your business and jurisdiction you may take help of our team who will help you out to establish your entity in Canada.