Taxes and Accounting in Canada

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Accounting Rules

Tax Year
The calendar tax year begins on 1 January and finishes on 31 December of the same year.
A company may also choose to establish a tax year of 12 consecutive months on diffrent basis. For example: from 1 June to 31 May.
Accounting Standards
Annual accounts in Canada are drawn up based to a great extent on the Generally Accepted Accounting Principles (GAAP).
The Accounting Standards Board of the Canadian Institute of Chartered Accountants ( CICA) establishes accounting and financial information standards.
Accounting Regulation Bodies
Canadian Accounting Standards Board
Accounting Reports
Financial accounts in Canada usually include a balance sheet, a profit and loss account, a statement of retained earnings and a cash flow statement.

BALANCE SHEET: 12 pre-determined consecutive months;
1) Assets
2) Liabilities
3) Shareholder balance
Publication Requirements
The recommendations in the CICA handbook apply to all Canadian companies. Specific regulations apply to banks, insurance companies and public organizations.
Reporting of financial statements and balance sheets is yearly. Companies listed on the Stock Exchange must provide quarterly financial reports.
Professional Accountancy Bodies
CICA , Canadian Institute of Chartered Accountants
CMA , Order of Certified Management Accountants
CPAB , Canadian Public Accountability Board
Certification and Auditing
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization.
You can contact an external auditor: DELOITE & TOUCHE, KPMG.
Accounting News
EIN News on Canada

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Tax Rates

Consumption Taxes

Nature of the Tax
Three types of Sales taxes: GST (federal Goods and Services Tax), HST (the Harmonized Sales Tax) and PST (Provincial Sales Tax).
Tax Rate
5% tax on goods and services + a variable provincial tax (PST or QST) of 0 to 10%.
In Newfoundland-Labrador, in Nova Scotia and New Brunswick, the provincial sales tax and the GST are replaced by a harmonized sales tax (HST) of 13%.
Reduced Tax Rate
There are exemptions for basic foodstuffs, pharmaceutical products and education. Insurance companies apply a rate of 9% to all premiums.
Other Consumption Taxes
The law on excise tax imposes taxes on leaded or unleaded gasoline, diesel fuel and motor vehicles.
Some provinces add other taxes. For further information, consult the Department of Finance website.
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Corporate Taxes

Company Tax
Tax Rate For Foreign Companies
All firms which run a company in Canada or own Canadian goods are liable for tax. Resident or non-resident companies are taxed on their net turnover, after expenses and deductions, if they show a profit.
Capital Gains Taxation
Long term capital gains are included in taxable income and are thus subject to the same taxation as company profits.
Main Allowable Deductions and Tax Credit
Companies may amortize their capital property up to a certain percentage every year. Also general company expenses and training costs.
For further details, consult the Canadian Legal Information Institute website
Other Corporate Taxes
Business taxes are levied by town councils. Some Canadian town councils do not levy business taxes or may offer certain exemptions. There is no fixed rate, it varies according to the council.

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Individual Taxes

Tax Rate

Federal Tax Rate progressive from 15 up to 29% (24.2% for Québec residents).
Provincial Tax from 10 to 24% according to revenue and province
For further information, consult the Canada Revenue Agency website.
Allowable Deductions and Tax Credit
Basic federal personal deductions 9,600 CAD.
Other reductions or allowances: moving expenses, alimony, investments, medical expenses, educational expenses, etc.
Special Expatriate Tax Regime
They have a right to some exemptions in force since 2008 such as eliminations of withholding tax on arm's length interest paid or credited to non-residents.
For further information, consult the Canada Revenue Agency website.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of Fiscal treaties between Canada and other countries
Withholding Taxes
Dividends: 25%, Interest: 25%, Royalties: 25%

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Intellectual Property

National Organizations
The organization responsible for intellectual property in Canada is the Canadian Intellectual Property Office (CIPO).
The Copyright Policy Branch for copyright
The Intellectual Property Institute of Canada (IPIC)
Regional Organizations
North American Free Trade Agreement (NAFTA)
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law Validity International Agreements Signed
Laws on Patents
20 years
Strasbourg agreement Concerning the International Patent Classification
Laws on Trademarks
15 years renewable Nice agreement
Laws on Designs
5 years renewable  
Laws on copyright
50 years after the death of the author. Berne convention
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Performances and Phonograms Treaty
Industrial Models
Protection of industrial models
5 years  

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Legal Framework

Independence of Justice
Judicial power is independent; it plays an important role in the interpretation of the law; it can bring down laws which violate the constitution. The Supreme Court of Canada is the highest judicial body in the country.
The Minister of Justice has a double mandate: he is both Minister of Justice and Public Prosecutor of Canada.
Equal Treatment of Nationals and Foreigners
Canada is a constitutional State. Foreign nationals can benefit from the same treatment as citizens of the country, including in commercial disputes. Canada is considered to be one of the least corrupt countries in the world.
The Language of Justice
English and French are the two judicial languages of the country.
Recourse to an Interpreter
Thanks to the Charter of Rights and Freedoms, every person has the right to an interpreter for any court appearance in Canada. It would seem, however, that the less demographic importance a minority community has, the more difficult it is for the members of this community to exercise their linguistic rights before the judicial bodies.
Sources of the Law and Legal Similarities
The main source of the law is the constitution of the country, which is made up of different written and non-written acts, customs, judicial decisions and traditions. The judicial system is based on English Common Law, except in Quebec where it is a system of civil law modelled on French law that prevails. The judicial power plays an important role in the interpretation of the law; it can bring down laws which violate the constitution. The Supreme Court of Canada is the highest judicial body in the country.
In Quebec commercial law is modelled on the French CIVIL CODE, whereas commercial law in the English-speaking provinces is extensively inspired by English law.
Checking National Laws Online
Statutes and Regulations in Quebec
Statutes and Regulations in Canada
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Business Practices

General Information
Services for Business, Foreign Affairs and International Trade Canada.
Opening Hours and Days
Companies are closed on Saturdays and Sundays. Retail outlets are open 7/7.

Public Holidays

New Year's Day January 1st
Good Friday (for banks, government offices) the Friday before Easter
Easter and Easter Monday March-April
Victoria Day May
Saint John the Baptist June
Canada Day July 1st
Civic holiday August
Labour Day 1st Monday of September
Thanksgiving Day 2nd Monday of October
Remembrance Day November 11
Christmas Day December 25
Boxing Day December 26
Holiday Compensation
If a public holiday falls on a Saturday or Sunday, it is made up on the Friday before or the Monday after.

Periods When Companies Usually Close

Companies are open all year round.

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