doing business in canada - Davies Ward Phillips & Vineberg LLP

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GST and ITCs are calculated, reported, and paid or refunded on a regular periodic basis. The reporting period ofa registrant may be monthly, quarterly or annually, depending upon the registrant's revenues and whether theregistrant elects to report on a more frequent basis than is otherwise required.OTHER COMMODITY TAXESBusinesses involved in bringing goods into Canada, or manufacturing and selling goods in Canada, may also beaffected, either directly or indirectly, by certain other taxes and duties imposed in Canada. Most productsimported into Canada are subject to two types of commodity taxes in addition to the GST, namely customsduties and provincial sales tax. Products such as alcohol and tobacco are subject to additional excise duties.PROVINCIAL SALES TAXEvery province, except Alberta, imposes some form of sales tax. In New Brunswick, Nova Scotia andNewfoundland, harmonized sales tax (“HST”) is charged at a single rate of 13% instead of GST and provincialsales tax. HST is levied under the ETA and follows the GST rules described above. Québec levies its own versionof the GST, which is described below. Ontario, Manitoba, Saskatchewan and British Columbia currently imposevarying forms of a retail sales tax (commonly referred to as provincial sales tax or "PST"). Ontario and BritishColumbia are set to harmonize their sales tax system with that of the GST, effective July 1, 2010. The combinedrate of tax will remain at 13% for Ontario and 12% for British Columbia, and the tax will be levied under the ETAas HST. A vendor in the business of selling taxable goods or providing taxable services in any one or more ofthese provinces is generally required to obtain a vendor's permit from each relevant provincial government andto collect and remit PST on taxable sales within that province.Québec has a goods and services tax system which closely parallels the concepts and provisions of the GST(including the requirement to register and collect tax). Québec Sales Tax ("QST") applies at the rate of 7.5% tothe price of goods and services inclusive of GST, making the effective rate 7.875% for a combined rate with GSTof 12.875%. The Québec tax authority is responsible for the collection and administration of both GST and QSTin Québec.QST will increase to 8.5% on January 1, 2011, for a combined rate of 13.925%, and to 9.5% on January 1, 2012,for a total combined rate with GST of 14.975%.OTHER TAXES - PROPERTY TAXES AND FEESLAND TRANSFER TAXESMany provinces impose tax on the transfer of real property (including with respect to certain leaseholdinterests). Ontario transferees of real property are generally liable for land transfer tax at a rate of 1.5% of theconsideration paid. Québec also levies a land transfer tax at similar rates. Certain deferrals and exemptionsmay be available in respect of land transfer tax, particularly in the context of qualifying inter-corporate transfersamongst affiliated corporations. Certain transfers of real property may also be subject to GST (and QST or HSTdepending on the relevant provincial jurisdiction).The City of Montréal levies land transfer take at slightly higher rates than the rest of Québec.The City of Toronto also imposes tax on the transfer of real property located in Toronto at a rate of up to 1.5%,which is in addition to the Ontario land transfer tax described above.MUNICIPAL PROPERTY TAXESReal property owners may also be subject to municipal property taxes and levies, generally based upon theassessed value of the property. The tax rates vary from one jurisdiction to another.Tax Considerations 91
APPENDIX I: CANADA’S IN FORCE TAX TREATIES(current to June 1, 2010)AlgeriaArgentinaArmeniaAustraliaAustriaAzerbaijanBangladeshBarbadosBelgiumBrazilBulgariaCameroonChileChina (PRC)*CroatiaCyprusCzech RepublicDenmarkDominican RepublicEcuadorEgyptEstoniaFinlandFranceGabonGermanyGuyanaHungaryIcelandIndiaIndonesiaIrelandIsraelItalyIvory CoastJamaicaJapanJordanKazakhstanKenyaKorea, Republic ofKuwaitKyrgyzstanLatviaLithuaniaLuxembourgMalaysiaMaltaMexicoMoldovaMongoliaMoroccoNetherlandsNew ZealandNigeriaNorwayOmanPakistanPapua New GuineaPeruPhilippinesPolandPortugalRomaniaRussiaSenegalSingaporeSlovak RepublicSloveniaSouth AfricaSpainSri LankaSwedenSwitzerlandTanzaniaThailandTrinidad & TobagoTunisiaUkraineUnited Arab EmiratesUnited KingdomUnited StatesUzbekistanVenezuelaVietnamZambiaZimbabwe*Convention does not apply to Hong Kong92 Tax Considerations
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DOING BUSINESSIN CANADAYOUR COMPLET
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ONTENTSTABLE OF CONTENTSINTRODUCTIO
Page 5 and 6:
IntroductionPOLITICAL AND CONSTITUT
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5RealEstateIndustrial and Intellect
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accordance with directions from the
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TITLE INSURANCE, TITLE OPINIONS AND
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11EnvironmentalLawIndustrial and In
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commercial activities, or carrying
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The federal government currently re
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17Types ofBusiness OrganizationIndu
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provincial law cannot do so as of r
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partnership, limited partners’ li
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parties. In Québec, joint venturer
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25Financing aBusiness OperationIndu
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The Civil Code of Québec provides
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29CorporateGovernanceIndustrial and
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Instrument 58-101. The practices re
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33CompetitionLawIndustrial and Inte
Page 37 and 38:
BID-RIGGINGBid rigging is any agree
Page 39 and 40: anticompetitive agreements among co
Page 41 and 42: 39ForeignInvestmentIndustrial and I
Page 43 and 44: apply for Canadian citizenship. (Pe
Page 45 and 46: (D)GENERAL REVIEW THRESHOLDSThe fol
Page 47 and 48: there be an "acquisition of control
Page 49 and 50: Industrial and Intellectual Propert
Page 51 and 52: to perform or cause them to be perf
Page 53 and 54: Registration grants an exclusive ri
Page 55 and 56: PIPEDA applies in all provinces of
Page 57 and 58: Employment LawCanadian employment l
Page 59 and 60: displacement, laying-off, suspensio
Page 61 and 62: easonable cause to believe that the
Page 63 and 64: 63Retirement Plans, EmployeeBenefit
Page 65 and 66: • funding;• eligibility;• pen
Page 67 and 68: 67Temporary Entry andPermanent Resi
Page 69 and 70: INTERNATIONAL AGREEMENTSIn recent y
Page 71 and 72: immigrant in another class, he or s
Page 73 and 74: 73Bankruptcy andInsolvency Proceedi
Page 75 and 76: BANKRUPTCYBankruptcy results in the
Page 77 and 78: INTERNATIONAL BANKRUPTCYASSETS LOCA
Page 79 and 80: Tax ConsiderationsThis chapter prov
Page 81 and 82: TAX REPORTINGAnnual Tax ReturnsCana
Page 83 and 84: Québec has legislation that limits
Page 85 and 86: Amendments, SIFTs and their unithol
Page 87 and 88: Conversely, where a Canadian reside
Page 89: A person, whether resident in Canad
Page 93: TORONTODAVIES WARD PHILLIPS & VINEB
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