How Continuance, Plus ‘Central Management And Control’ Affect Corporate Tax Residence In Canada

Overview: Brief Overview of Corporate Residence and Incorporation

A corporation’s residence for tax purposes and the jurisdiction under which it is incorporated are legally distinct concepts. The corporate statute that governs a corporation, whether the Canada Business Corporations Act (“CBCA”) or a provincial equivalent, dictates its internal governance rules, but it does not, on its own, determine where the corporation is resident in Canada for the purposes of the Income Tax Act. In most cases, the jurisdiction of incorporation and the jurisdiction of tax residence coincide. However, where a corporation continues into a foreign jurisdiction, or where its real decision-making occurs somewhere other than its place of incorporation, the two can diverge. A corporation that emigrates from Canada does not necessarily cease to be a Canadian resident for tax purposes, and a corporation incorporated entirely outside Canada may nonetheless be found resident in Canada.