Taxation of Non-Resident Franchisors in Canada
Taxation of Non-Resident Franchisors in Canada
Federal Income Tax
Canada imposes a federal corporation income tax upon non-residents who carry on business in Canada and derive income from Canadian business sources or investments in Canada. This tax is not imposed on foreign franchisors who have no permanent establishment in Canada.
A federal non-resident "withholding tax" is imposed on a number of different remittances from Canadian franchisees to non-resident franchisors. The franchisee is required to withhold tax from the gross amount of the dividend, interest or related amount and remit it to the Receiver General for Canada as tax proceeds for the non-resident recipient. International conventions provide for a reduction in the withholding tax for enumerated Canadian-source income that is distributed to non-residents.
If a non-resident franchisor has a permanent business establishment in Canada, it will be responsible for "branch tax" if it does not incorporate Canadian subsidiaries. However, a foreign franchisor will not be liable for branch tax until its aggregate income earned in Canada exceeds its capital investment in Canada.
Federal Capital Tax
Canada imposes a "large corporations tax" at a rate of 0.2% on the capital a corporation uses in Canada in excess of $10,000,000.00 Cdn.. For non-resident franchisors, the tax is limited to the portion of the corporation's capital which is used in Canada in the relevant fiscal year.
Provincial Income and Capital Taxes
All provinces collect income tax from corporations conducting business within the province. Most provinces also impose a capital tax that is based on a percentage of the corporation's "taxable paid up capital".
Sales and Commodity Taxes
Both Federal and Provincial governments impose sales tax in Canada, not including the province of Alberta. Most provinces have sales tax between 6% and 10%. Ontario sales tax is 8%.
There is also a federal goods and services tax, which is a 7% tax that is applied to each transaction in the production and distribution chain, including services and including the importation of most goods and services into Canada.
Federal Customs Duties
Goods imported into Canada may be subject to federal customs duties. The rate of the concession fee will depend upon the tariff classification and origin of the goods. Note that the North America Free trade Agreement eliminated customs duties for most goods imported into Canada from the United States, and also the converse.
Land Transfer Tax
In most provinces, a land transfer tax will apply to the acquisition of real estate. In Ontario the general rate is 0.5% on the initial $55,000, 1% on the following $195,000 and 1.5% on the balance of the consideration to be paid for the land.
Taxation of NonResident Franchisors in Canada - To learn more about this author, visit Peter Macrae Dillon's Website.
Like this article? Share it with your friends
Taxation of Non-Resident Franchisors in Canada
Federal Income Tax
Canada imposes a federal corporation income tax upon non-residents who carry on business in Canada and derive income from Canadian business sources or investments in Canada. This tax is not imposed on foreign franchisors who have no permanent establishment in Canada.
A federal non-resident "withholding tax" is imposed on a number of different remittances from Canadian franchisees to non-resident franchisors. The franchisee is required to withhold tax from the gross amount of the dividend, interest or related amount and remit it to the Receiver General for Canada as tax proceeds for the non-resident recipient. International conventions provide for a reduction in the withholding tax for enumerated Canadian-source income that is distributed to non-residents.
If a non-resident franchisor has a permanent business establishment in Canada, it will be responsible for "branch tax" if it does not incorporate Canadian subsidiaries. However, a foreign franchisor will not be liable for branch tax until its aggregate income earned in Canada exceeds its capital investment in Canada.
Federal Capital Tax
Canada imposes a "large corporations tax" at a rate of 0.2% on the capital a corporation uses in Canada in excess of $10,000,000.00 Cdn.. For non-resident franchisors, the tax is limited to the portion of the corporation's capital which is used in Canada in the relevant fiscal year.
Provincial Income and Capital Taxes
All provinces collect income tax from corporations conducting business within the province. Most provinces also impose a capital tax that is based on a percentage of the corporation's "taxable paid up capital".
Sales and Commodity Taxes
Both Federal and Provincial governments impose sales tax in Canada, not including the province of Alberta. Most provinces have sales tax between 6% and 10%. Ontario sales tax is 8%.
There is also a federal goods and services tax, which is a 7% tax that is applied to each transaction in the production and distribution chain, including services and including the importation of most goods and services into Canada.
Federal Customs Duties
Goods imported into Canada may be subject to federal customs duties. The rate of the concession fee will depend upon the tariff classification and origin of the goods. Note that the North America Free trade Agreement eliminated customs duties for most goods imported into Canada from the United States, and also the converse.
Land Transfer Tax
In most provinces, a land transfer tax will apply to the acquisition of real estate. In Ontario the general rate is 0.5% on the initial $55,000, 1% on the following $195,000 and 1.5% on the balance of the consideration to be paid for the land.
Taxation of NonResident Franchisors in Canada - To learn more about this author, visit Peter Macrae Dillon's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
|
To learn more about the Evan Elite Author Program please contact us. |
 | |
|  |
Subscribe to Peter's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
 |
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Strategic Plan Loyalty Strategies Mirror Marketing Business and Income Strategic Alliance |
|
 | ||
 |
Top 50 SEO Posts - 2008
Top SEO Posts of the Year | |
 |
Top Social Business Blogs
Top Social Entrepreneur Blogs | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
| ||||||||||||
| ||||||||||||
|
|
||||||||||||