Residence of Corporations

Question 1

When is a corporation deemed to be a resident of Canada?

Answer 1

1. A corporation is deemed to be resident in Canada throughout a taxation year if it was incorporated in Canada after April 26, 1965 (regardless of where its centrol control and management is).
2. If it was incorporated before April 26, 1965, it may be deemed to be resident of Canada if:
   
   • it has its central control and management in Canada (common law principle), or
   • it carried on business in Canada during any taxation year after April 26,1965
3. A corporation not incorporated in Canada is a Canadian resident if it has its central control and management in Canada (by common law principle; not deemed)

Question 2

Define a non-resident corporation.

Answer 2

A non-resident corporation is a corporation that is:

• not a common law resident (control & management in Canada)
• not a deemed resident (incorporated in Canada after April 26, 1965)
• A non-resident is still required to pay tax in Canada on its Canadian-source income if it carries on business in Canada.