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There are different types of corporations that exist in Canada. This distinction among different types of corporations in Canada is usually done for the tax purposes. The promoter needs to decide the type of corporation at the end of the tax year. Selecting a type of corporation will determine the rate of taxes and deductions that will be applicable to the corporation at the end of the tax year. Following are the 5 types of corporations in Canada for the tax purposes:
A corporation is a separate legal entity having a distinct and unique name. It has the capacity to enter into contracts and buy and transfer property under its own name and not in the name of its members. A corporation has the capacity to raise debts under its own name. A corporation has the capacity to sue and be sued under its own name.
Following are the 5 types of Corporations in Canada. .
If a public corporation has complied with some of the prescribed conditions mentioned under Regulation 4800(2), it can elect, or the minister of National Revenue can designate it not to be a Public Corporation.
From the above discussion, it can be concluded that for tax purposes, there are five types of corporations in Canada. It is advised that the promoters must carefully select the type of corporation as the change of corporation type may lead to significant tax changes. For example, there are certain calculations on the return which depend on the whether the corporation is a private corporation or a CCPC throughout the tax year or at any time in the tax year, or at the end of the tax year.
Read Our Article: How to set up a Corporation in Canada?
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