Canadian Companies - Québec

Among the already existing and more or less known structures, it should be noted that Canadian companies, incorporated according to the law of Quebec, can be used to great advantage and could beneficially replace those incorporated in more exotic jurisdictions commonly used by practitioners.

Properly incorporated and operated, these corporations can realise activities and generate revenue and gains, outside of Canada, that would not be taxable in Canada. Canadian nominee companies can carry on commercial activities, make deposits, hold securities, as well as all manner of property, and this in all jurisdictions, including those of North America, without incurring Canadian tax liability. There is no pre-notification required and all assets are accounted for off the balance sheet of these nominee corporations.

It has become increasingly difficult for onshore companies to be seen to trade with offshore companies over recent years due to the increasing vigilance of various taxation authorities and the introduction, whether officially or not, of tax havens blacklists. In some cases nationals may be forbidden outright to do business with these offshore entities. In other cases their appearance in such transactions may invite undesirable extra scrutiny.

What is often sought is a structure with an on-shore profile, which enjoys offshore taxation benefits. As Canada is not perceived as an offshore jurisdiction, such a structure can be put together by using a Canadian registered company - the Nominee, which agrees to transact business on behalf of another company - the principal, enjoying itself of a zero tax benefit, through a prete–nom and trust agreement. All business will be conducted in the name of the Canadian company on behalf and for the account of the principal whose name need not appear in any of the documentation. At all stages, the Canadian company will simply be handling business on behalf of the principal.

Canadian companies organised by our supplier have a board of directors composed one being a Canadian resident citizen.

Generally, as long as these nominee companies do not carry on transactions, earn income, capital gains or the like in Canada, and do not conduct any activity on their own behalves, they do not incur Canadian tax liability. Obviously these corporations cannot act as nominees for Canadian residents nor apply for the benefits of Canadian tax treaties.