Federal vs. Provincial Incorporation

Definition

Federal and provincial incorporation both create a corporation under their respective statutes. The choice affects governance, corporate-name review, registry filings and costs. It does not by itself provide a lower income-tax rate. Tax residence, ownership, control, business activity and permanent establishments determine the relevant tax treatment.

Federal incorporation

The Canada Business Corporations Act (CBCA) provides national corporate-name review and a right to use an approved word name across Canada. Approval is not a trademark registration or a guarantee against another person's existing rights. Corporations Canada naming guidance

The CBCA generally requires at least 25% resident-Canadian directors, or at least one when there are fewer than four directors. Certain regulated sectors have additional or majority requirements, with specific statutory exceptions. They are not a general waiver of residency. CBCA section 105

A federal corporation still needs provincial or territorial registration wherever the applicable local rules require it. Federal annual returns and provincial obligations are separate. Extra-provincial registration

British Columbia incorporation

BC's statute does not impose the CBCA resident-Canadian director quota. It does require a registered office and records office in BC, with the prescribed addresses and records. These office duties are distinct from director residency or an extraprovincial attorney requirement. BC Business Corporations Act

A BC corporation operating in another jurisdiction must check that jurisdiction's registration rules. A BC corporate name is not a substitute for national trademark protection.

Cost example

For ordinary online incorporation, the listed federal filing fee is $200. BC's basic incorporation fee is $350 and its ordinary extraprovincial registration fee is also $350, subject to applicable exceptions. Name approval, professional assistance, priority processing and service-channel charges can be additional. A federal company registering in BC therefore starts with $550 in these two basic filing fees, rather than assuming its federal fee covers everything. Federal fee, BC fee schedule

A founder comparing the routes should consider actual operating locations, director eligibility, investor requirements, share structure and ongoing administration. Ontario has its own statute and registry requirements; the federal/BC comparison is not a substitute for checking another province.

Ongoing duties

Registry annual filings do not replace the T2 tax return. Maintain corporate records, director and address updates, and applicable ownership-transparency records as well as tax accounts. Limited shareholder liability also does not eliminate personal guarantees or statutory director liabilities.

Related concepts

After choosing a jurisdiction, design the share classes and put a shareholders' agreement in place. Ongoing compliance is covered by the BC Annual Report and Ontario Annual Return. For holding-company layering within a BC structure, see BC Holding Company.