Words and Phrases - "incorporated"
27 February 2020 CBA Roundtable, Q.17
(a) Is a corporation formed by the amalgamation of one or more corporations, pursuant to the laws of Canada or a province, considered to be “incorporated” in Canada and, therefore, deemed by s. 132(1)(a) to be resident in Canada (having regard inter alia to Deltona, which considered the formation by amalgamation of a corporation to be its “incorporation”), provided it is not continued elsewhere; and
(b) Is a corporation incorporated in Canada that was continued in a jurisdiction outside Canada considered to be resident in Canada, if its central management and control is exercised in Canada, or to the extent that it maintains and carries on activities through a permanent establishment in Canada?
CRA responded:
a) Under paragraph 132(1)(a) of the ETA, a corporation incorporated or continued in Canada and not continued elsewhere is deemed to be resident in Canada. Where two or more Canadian corporations amalgamate under the rules for amalgamation set out in the Canadian federal or provincial statute under which they were incorporated, and a certificate of amalgamation is issued, the amalgamated corporation will generally be deemed to be resident in Canada because it would be considered to be incorporated in Canada.
b) A corporation incorporated in Canada that is continued in a jurisdiction outside of Canada would not be deemed, under subsection 132(1)(a), to be resident in Canada. However, such a corporation may be considered resident in Canada if the central management and control of the activities of the corporation is exercised in Canada. This determination is a question of fact.
Under subsection 132(2), if a non-resident corporation has a permanent establishment in Canada, the corporation is deemed to be resident in Canada in respect of, but only in respect of, activities of the corporation carried on through that establishment.
Deltona Corp. v. MNR, 71 DTC 5186, [1971] CTC 297 (Ex Ct), briefly aff'd 73 DTC 5180, [1973] CTC 215 (SCC)
A corporation which in 1966 was "continued" under the Canada Corporations Act from its predecessors pursuant to their amalgamation, was "incorporated" after 1965, so that it was deemed to be resident in Canada. Cattanach J stated (at pp. 5199-5200):
As previously there were two companies and after the issue of the letters patent there is only 'one company', it seems to follow that that 'one company' is a company that did not previously exist and that came into existence at that time. ...
[O]nce it is accepted that amalgamation results in a corporation that did not exist before, it follows that it is, among other things, the 'incorporation' of that new corporation"
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 133 - Subsection 133(8) - Non-Resident-Owned Investment Corporation | 143 | |
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) | 76 |