Doing Business in Canada
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Doing Business in Canada June 2018 Osler, Hoskin & Harcourt llp Table of contents When starting or expanding a business in Canada, there are many things that you need to know and do. Osler’s Doing Business in Canada guide provides practical information, with links to useful resources, to help get you started. Doing Business in Canada provides general information only and does not constitute legal or other professional advice. Specific advice should be sought in connection with your circumstances. For more information, please contact the corresponding practice group listed with each topic page. CREATING, EXPANDING OR ACQUIRING A NEW OPERATING A FRANCHISE SYSTEM IN CANADA BUSINESS IN CANADA Franchising in Canada 23 Initial structuring and income tax considerations 4 Choosing, registering and protecting your corporate name 6 SELLING PRODUCTS OR SERVICES TO Filings and registrations 8 CUSTOMERS IN CANADA Foreign investment notifications 10 Packaging and labelling 25 Acquiring a Canadian business 12 French language rules 26 Financing and banking arrangements 14 Consumer product safety 28 Regulated industries 15 Regulated products 29 Doing business in Québec 16 Selling through resellers, distributors or sales representatives 31 Canadianizing commercial agreements 18 Online sales 32 Commodity taxes 33 INVESTING IN A BUSINESS IN CANADA Advertising to Canadians 36 Investing in a Canadian business 19 Contest and sweepstakes 37 Gift cards and consumer loyalty 38 SETTING UP A CANADIAN SUBSIDIARY TO Payment processing 40 OPERATE THE BUSINESS Collecting debts from consumers 42 Forming a Canadian subsidiary 21 DOING BUSINESS IN CANADA 2 Osler, Hoskin & Harcourt llp HIRING EMPLOYEES IN CANADA COMMUNICATING WITH CONSUMERS AND BUSINESSES Hiring employees 44 Electronic messaging 81 Human rights in the workplace and privacy 46 Telemarketing 82 Employment agreements 47 Accessibility for Ontarians with Disabilities Act 48 INSTALLING COMPUTER PROGRAMS Public retirement income programs 50 Computer program rules 83 Employer-sponsored retirement plans 52 Group benefit (welfare) plans 54 ADDITIONAL INFORMATION Canada’s tax system 84 OWNING OR LEASING REAL PROPERTY IN CANADA Branch profits tax 86 Leasing a place of business 56 Thin-capitalization rules 87 Acquiring real estate 57 Branch of a foreign corporation vs. Canadian subsidiary 88 Municipal land use planning and development 59 Lobbying in Canada 90 Construction issues 61 Insolvency and restructuring in Canada 92 Anti-corruption, bribery and enforcement 94 CREATING AND REGISTERING INTELLECTUAL PROPERTY Sanctions laws in Canada 96 Retaining intellectual property in what you develop 63 Anti-money laundering and terrorist financing 98 Registering your trademarks 65 Capital markets regulatory framework and enforcement 100 Applying for a patent 67 Registering your copyright 69 Subscribe Registering your industrial designs and integrated circuits 71 Osler is continually updating and expanding Doing Business Protecting your trade secrets 73 in Canada. To be notified when new topics are added, please Registering a .CA domain name 75 subscribe to our updates at osler.com/subscribe-dbic PROCESSING PERSONAL INFORMATION Consumer privacy 77 Data location 78 Online behavioural / targeted advertising 79 Mobile app privacy 80 DOING BUSINESS IN CANADA 3 Initial structuring and income tax considerations Things to know • An important distinction exists between doing business “in Canada” (generally considered to result in a Canadian tax presence) and doing business “with Canada” (which can often be accomplished without USEFUL RESOURCES any Canadian tax presence). Government of Canada • A business may be carried on in Canada directly by a non-Canadian (through what is known as a • Is incorporation right for you? “branch office”) or indirectly through the establishment of a separate Canadian entity. • Name a corporation • A Canadian entity can be established in a number of ways: creating a corporation (incorporated under the federal laws of Canada or one of its provinces or territories) or a partnership (formed • Order a Nuans report under one of the provinces or territories); acquiring an existing Canadian entity; or joint venture with a Canadian entity. • Both operational and tax considerations are critical in determining what form of entity will carry on business in Canada. • Sending foreign based employees to Canada or hiring Canadian employees to solicit business or sign agreements in Canada on behalf of the foreign entity could result in the foreign entity being considered to be carrying on business in Canada and subject to Canadian tax. DOING BUSINESS IN CANADA 4 Initial structuring and income tax considerations Osler, Hoskin & Harcourt llp Things to do DETERMINE METHOD OF OPERATIONS • Does the business require the presence of employees in Canada (sales and/or technical support) or can RELATED TOPICS the business be operated through electronic means? Does the business require an ongoing physical • Forming a Canadian subsidiary presence in Canada (retail location or otherwise) or can it be operated without physical space? • Choosing, registering and protecting DETERMINE TAX STRUCTURING your corporate name • If applicable, consider the Canadian business in the context of your overall organization. For example, • Financing and banking arrangements is there a desire to consolidate the financial results of the Canadian operations with those of a foreign • Filings and registrations parent? Is the Canadian business expected to generate losses in the early years of its operations? Is the foreign parent willing to be a Canadian taxpayer? Other considerations will also apply. A Canadian tax • Foreign investment notifications advisor should be consulted. • Commodity taxes • Branch of a foreign corporation vs. Canadian subsidiary • Canada’s tax system • Thin-capitalization rules • Branch profits tax Need more info? Osler’s Tax Group can help. Find out more at osler.com/tax DOING BUSINESS IN CANADA 5 Choosing, registering and protecting your corporate name Things to know • If you are incorporating a Canadian subsidiary, you may use a name that you choose or have a numbered name assigned to you. USEFUL RESOURCES • Whether you will be carrying on business through a Canadian subsidiary, or carrying on business in Government of Canada Canada as a foreign corporation, you will need to register in each province and territory in which you • Corporations Canada will carry on business. You will need to have your name approved in some provinces and territories. • Naming a corporation • You can’t assume that the name you use in another country is available for use in Canada – it may be that the name has been registered by another company or is being used by another business. • A guide to trademarks • Registering your corporation does not guarantee that you have a legal right to use the name — if your • Trademarks CIPO homepage name is confusingly similar to an existing corporate name, business name or trademark, the owner of • Ordering a Nuans search that name or mark may convince a court to order that you stop using your name and pay damages. • Choosing a business name • A Nuans search can help compare your proposed name with a database of names that includes registered and applied-for trademarks, provincial and federal corporate names, and most provincially registered business names (except corporate and business names in Québec). • Trademark searches can help assess whether your proposed name is the same as or similar to a registered or unregistered trademark. • A corporation may carry on business using a name different from its registered corporate name or assigned numbered name. • A corporation that carries on business in the province of Québec must have either a bilingual name or a name in French, unless the name is a trademark. DOING BUSINESS IN CANADA 6 Choosing, registering and protecting your corporate name Osler, Hoskin & Harcourt llp Things to do • Select a name that is distinctive and does not cause confusion with any existing name or trademark. • Ensure that your name does not include unacceptable terms (such as the word “Bank”) or words that RELATED TOPICS are misleading or obscene, or that suggest that you provide obscene, scandalous or immoral services. • Registering a .CA domain name • Order a Nuans search – this can be done online or through a service provider known as a • Registering your trademarks “search house”. • Filings and registrations • Consider ordering one or more trademark searches — a search of registered and applied-for trademarks can be conducted online at a government website, or through a law firm or other service • Doing business in Québec provider (a search conducted by a service provider can also cover unregistered trademarks). • If you intend to conduct business online through a Canadian domain, conduct searches to Need more info? determine whether the relevant domain is available. Contact us at [email protected] • Consider whether to register a “business name”. • Consider whether to apply for a trademark registration for your corporate or business name (and other distinctive words, symbols or designs) – registration can help prevent latecomers from using a confusingly similar name or trademark anywhere in Canada. DOING BUSINESS IN CANADA 7 Filings and registrations Things to know EXTRA-PROVINCIAL REGISTRATIONS • If a Canadian subsidiary has been incorporated under the laws of a particular Canadian province or USEFUL RESOURCES territory, the subsidiary will need to register in each additional