Safe and Stable Political Climate
Canada’s stable political environment and educated, multicultural workforce make it an excellent choice for building and growing a business. Companies from all over the world have expanded into Canada and this trend has been accelerating.
Canada is a business friendly country and businesses from most countries are encouraged to establish themselves here. Like other developed countries, Canada has a system of laws and regulations that are designed to protect consumers and employees as well as to provide businesses with a fair and level playing field upon which to compete.
If you are new to Canada and starting a business or if you intend to expand your existing business into Canada, contact Baker & Company to guide you through the process.
Fair Minded Laws Protect Workers and Consumers
Canada has three levels of government, each responsible for regulating different aspects of Canadian life and industry. The federal government of Canada regulates issues and activities of national importance such as Defence, Airlines, Banking, and Immigration, for example. Provincial governments (there are 12) regulate issues and activities within provincial boundaries such as health care delivery, education, motor vehicles, and public safety. Municipal or City governments are responsible for local land use planning, roads and parks, policing and waste disposal. Not surprisingly, every level of government has the power to collect taxes.
When carrying on business in Canada, it is likely that you will be required to comply with laws and regulations established by each level of government. Depending on the type of business you operate, you may require a licence to operate issued by the local municipality. Further, the municipality will regulate where you may situate your business; dirty businesses are kept separate from clean, quiet businesses. It is not unusual for the Province to require that your business receive approval to operate, as a way of regulating the standards by which businesses conduct their operations. Collection Agencies, Security Guard Companies, Automotive Retailers, Gas Stations, Stock Brokers. Real Estate Agents and Health Care Professional are all examples of companies and service providers that are required to have provincial government authority to operate in Ontario. The Government of Canada regulates your ability to enter Canada as a foreign national and regulates your ability to remain in Canada and work in your business. The Government of Canada regulates the existence of a healthy and competitive marketplace and will prevent businesses from combining in any way that will reduce competition in Canada. Similarly, the Government of Canada will protect businesses related to Canada’s culture and heritage by regulating the extent to which foreign companies may acquire them.
The lawyers at Baker & Company will help you navigate through the various rules and regulations that may affect your business operations in Canada. If licences or approvals are required, our lawyers will assist you through the process.
Buying or Leasing Real Property in Canada
Establishing your business in Canada may involve the acquisition of real property or the leasing of office space. There are currently no legal restrictions that prevent foreign individuals or corporations from acquiring real property in Canada. Profits earned from real estate investments by foreign owners are taxable in Canada. Foreign individuals and corporations are permitted to acquire land for development purposes. Our real property lawyers are experienced with property acquisition and commercial leasing, both big and small. As your “local” representatives in Canada, we can introduce you to reputable realtors and leasing agents, accounting firms, and bankers.
Canada Has Two Official Languages
Canada has two official languages; English and French. Most products sold in Canada must have labels in both languages; including foreign products imported for sale in Canada. Should you decide to operate your business in Quebec, there are additional laws and regulations designed to help preserve the french language and culture.
Canadian Consumer Protection Laws Ensure that Products and Services Sold in Canada are Safe
Food products, health food products, drugs, remedies, electrical products, and motor vehicles are examples of products which will require compliance with Canadian regulations and standards before importation and sale in Canada is permitted. Baker & Company will help you determine the steps required to ensure that your product or service complies fully with Canadian law, before being offered for sale here in Canada.
Taxation in Canada
Like most other developed countries, Canada imposes a tax on income and profit. Canadian individuals and corporations as well as foreign individuals and corporations earning Canadian income or profit are required to file annual income tax returns, declaring their income. Canada has entered into tax treaties with many other countries. These tax treaties are designed, for the most part, to relieve situations where taxpayers are obliged to pay tax on the same income in both countries. Income earned by a foreign owned corporation in Canada is subject to a withholding tax at the time profits are paid out to foreign shareholders. This requirement ensures that foreign owned corporations file income tax returns and pay tax in Canada.
Canada and its Provinces impose a value added tax on most products and services sold in Canada (“HST”). It is a combined provincial and federal tax which varies slightly from province to province. It is important to note that this is a tax imposed only on consumers and collected by businesses from their customers at the time of payment. Businesses themselves receive a rebate of any and all HST paid by that business in connection with the operation of its enterprise. This tax is remitted monthly, quarterly or annually (depending on the volume of business that you do) to the federal government. The federal government distributes a portion of each dollar collected to the relevant provincial government.
Municipalities raise the majority of their revenue requirements from the imposition of property taxes on both residential and commercial properties. The taxes are calculated as a percentage of the current market value of the property being taxed. Taxes are greater on commercial properties than on residential properties. Taxes are imposed annually and generally paid in 6 instalments throughout the year. Some provinces and municipalities impose a land transfer tax on the transfer of a property from one owner to another; paid by the purchaser as a percentage of the price paid for the property.
Municipalities also raise revenue by imposing charges for parking on municipal roadways and imposing fines for those who park without paying parking charges. Fines are also imposed by municipalities for driving infractions on municipal roadways. in addition, fines are imposed for breaches of municipal by-laws. Examples of municipal by-law regulations include zoning (land use restrictions) infractions, requirements relating to the preparation and storage of food, and requirements relating to the storage and disposal of waste and garbage.
Assembling your Canadian Team
Because Baker & Company already represents more than 400 active Canadian companies, we are uniquely positioned to help you understand the Canadian business climate and the regulations that will be relevant to your business model. Contact us well in advance of your target date to commence business operations in Canada. We will help you design a corporate structure that is tax efficient, protects you from personal liability and which allows for a fair-minded distribution of authority and profit amongst your stakeholders and key personnel.
Employment Law in Canada is based on a decidedly different set of principles than employment law in the United States. Employers in Canada are entitled to terminate employees without the necessity of finding fault with the employee’s performance or behaviour provided that the employee is given sufficient notice that his/her employment will come to an end. Minimum notice periods are regulated by provincial legislation but the Courts have a long history of requiring employers to give longer periods of notice to employees than the minimum notice periods required by provincial law. Working Notice of termination may be given to an employee in advance of the termination date so as to give the employee plenty of time to find new employment before the arrival of the termination date. Alternatively, some employers prefer to require the terminated employee to leave immediately, and choose to pay the terminated employee the income that the employee would have earned during the period of working notice. Baker & Company’s employment lawyers will help you minimize your exposure to expensive termination payment requirements. Call us before you hire or terminate an employee in Canada.
Provincial laws in Canada require that employees be paid at least a minimum wage and that employees receive a higher wage rate for work performed in excess of 44 hours per week. Canadian employees are entitled to at least 2 weeks paid vacation per year and to time off, or additional pay, in respect of certain Canadian statutory holidays. These laws and regulations can be quite complex and so, before hiring workers in Canada, spend some time with one of our lawyers to ensure that you will be compliant.
Canada and its provinces have well established laws and regulations to protect human rights. In general terms it is unlawful for employers to discriminate on the basis of race, gender, religion. sexual preference and, more recently, sexual identity. Pregnant women are also protected. While, generally, employers do not need a good reason to terminate a Canadian employee, they must not terminate employees for reasons that are deemed to be illegitimate by Canadian human rights legislation.
Under most circumstances you will be entitled to manage your company in Canada, although Canadian immigration laws will regulate your ability to work and/or reside here. Canadian immigration laws also regulate your ability to bring foreign workers into Canada. If necessary, we will introduce you to experienced and talented Immigration Law lawyers who can guide you through the process of acquiring any and all necessary work permits or visas.