CANADA’S ADMINISTRATIVE STRUCTURE
Canada’s administrative structure consists of provinces and territories.
Canada is governed by a parliamentary democracy and a constitutional monarchy.
The Canadian Federation comprises 10 provinces and 3 territories.
Provinces: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland & Labrador.
Territories: Yukon, Northwest Territories, Nunavut.
The state’s judicial authority is exercised by various courts at the federal and provincial levels.
The Criminal Code applies nationwide in Canada. However, other areas of law are governed by different statutes in each province.
Canada has trial courts, courts of appeal, and a court of last resort. The Supreme Court of Canada is the highest appellate body. Except in the province of Quebec, Supreme Court decisions are binding; in Quebec, while not binding, they are taken into account by the courts.
Canada’s official languages are English and French. The province of Quebec has a predominantly French-speaking population.
Canada’s currency is the Canadian dollar. Cryptocurrency transfers are also commonly used.
CUSTOMS PROCEDURES
There is no free trade agreement between Canada and Türkiye. However, Canada has free trade agreements with other countries. You should check whether there is an FTA between Canada and the country you will be shipping from.
There is a double taxation avoidance agreement between Canada and Türkiye, signed on 14 July 2009.
When you intend to carry out import operations into any province in Canada, you must review that province’s customs and tax rules.
Quotas and licensing systems are applied for certain products in customs procedures.
For tariff classification of goods, a 6-digit code system (Harmonized System Code) is used.
In Canada, customs duties are determined based on the sale price of the goods and calculated as a percentage rate.
Customs tariffs are published annually.
From the perspective of customs law, the Customs Act applies. Other applicable legislation includes the Canada Border Services Agency Act and the Export and Import Permits Act.
Canada’s standardization system is applied similarly to that of the United States. Products intended for import must comply with national and federal standards and possess the required certifications.
At the federal level, the authority responsible for setting and overseeing standards is the Standards Council of Canada.
There is no obligation to conduct pre-shipment inspection of goods for exports destined to Canada.
CANADIAN CUSTOMS ACT
The Customs Act contains provisions regarding both goods brought in by travelers and goods imported directly.
If a border services officer suspects that goods carried by a traveler or intended for export contravene the law, the goods are taken to a senior officer to initiate the necessary procedures.
The officer shall immediately take the person to a senior officer and request that a search be initiated.
However, the senior officer may determine that a search is unnecessary and reject the request.
Any officer conducting a personal search must be of the same sex as the person being searched. If no such officer is available, the person must be taken to a place where a same-sex officer is present.
On the basis of reasonable suspicion, a customs officer may require that containers of imported or exported goods be opened and may take reasonable samples. If the suspicion concerns mail, the officer may similarly open an envelope to examine postal items and take samples.
An officer may open a package and take samples if there is doubt about the origin of the goods or about the tariff classification declared in the customs declaration.
If there are reasonable grounds to suspect a person entering Canada, the officer may detain the person.
An individual may request that the search be conducted by a senior officer; if requested, the person must be taken before a senior officer without delay.
Goods suspected of being imported or exported in contravention of Acts of Parliament may be seized by an officer.
If the importation of a product is prohibited, the product may be destroyed, re-exported, or forfeited to the Crown.
TAXATION
Tax rates vary by province in Canada.
Generally speaking, corporate income tax is collected at rates ranging from 15% to 38%.
With respect to income taxes, there are Federal taxes and provincial/territorial taxes.
Canada has a Tax Court of Canada, which examines disputes at the federal level as a superior court of record.
COMPANY FORMATION
An online registration system is available for those wishing to establish a commercial company in Canada.
A limited liability company can be incorporated online at a cost of approximately CAD 200.
After you set up your business, national and regional business support opportunities—including financing—are available for immigrant and domestic entrepreneurs.
Before establishing your business, you must decide in which region and province you wish to operate.
SOLE PROPRIETORSHIP MODEL
In Canada, you may operate as a sole proprietorship, incorporate a company, form a cooperative, or choose one of the other partnership models.
A sole proprietorship is a business owned by one person and has no separate legal personality. It is the simplest business structure.
The sole proprietor is solely responsible for decision-making. All profits and losses belong to the proprietor. In this model, the proprietor is personally liable with all personal assets for the debts of the business; personal assets may be liquidated to satisfy business debts. You pay personal income tax on your net business income.
Sole proprietorships also use a business name. You may use your own name, choose another business name, or use a combination. You should check whether your intended business name is already in use.
As a sole proprietor, you may issue invoices in your own name. If you have registered a business name, invoices must be issued under that name. If you use a business name other than your own, you must use a separate bank account opened for the business rather than your personal account.
If you produce and sell taxable goods, you must register for the applicable tax program(s).
PARTNERSHIP MODEL
Another commercial structure in Canada is the partnership.
In this model, more than one person, company, partnership, or even trust may participate. They come together to carry on business jointly.
Each partner may contribute money, labor, property, or skill and, in return, is entitled to a share of the profits or losses.
The partnership agreement sets out how profits and losses are shared. A partnership does not require a written agreement to be formed; it may be created orally. However, for evidentiary purposes and to define obligations, we recommend a written agreement prepared with legal counsel. Written agreements are also common practice in Canada.
In a partnership, the firm is liable for any act or transaction carried out by any partner within the ordinary course of the partnership’s business.
Accordingly, third parties may pursue the partnership for acts undertaken by your partner within the ordinary scope of the partnership’s activities.
A partnership itself is not an annual income tax filer; instead, partners report the income they receive from the partnership and pay taxes accordingly.
For taxation within the partnership model, different rules apply depending on annual income and total assets.
For the taxation of sales, the applicable tax rate is that of the province where the purchaser takes delivery.
For example, if your business is in Vancouver but you deliver and sell the product to a buyer in Ontario, Ontario’s tax rules apply.
One reason to choose a partnership is the ease of formation and dissolution.
However, each partner has unlimited liability for partnership debts. Regardless of the capital contributed by another partner, you are liable with all your assets for partnership obligations—for example, obligations to employees.
You may also choose a limited partnership or limited liability partnership structure.
CORPORATE BUSINESS MODELS
One legal entity may become a shareholder of another legal entity.
Provincial corporate registries are open to the public, and anyone may review them for a fee.
Mergers are legally recognized and regulated.
Companies can generally be classified as:
Company limited by shares
Company limited by guarantee
Unlimited liability company
Limited Companies:
This is a type of company in which shareholders’ shares and liabilities are limited. The company name must include “Incorporated,” “Limited,” “Ltd,” “Inc.” or their French equivalents.
It may be formed with at least one shareholder.
Each shareholder’s share and address must be stated.
In a company limited by guarantee, members guarantee the company’s assets within specified limits upon liquidation.
For the incorporation of a limited company, the articles must be signed before at least one witness.
The required contents of the articles are specified by law.
Choosing a company name is important.
No company may be incorporated under a name identical to that of another company, and names that mislead the public or cause unfair competition are prohibited.
The registrar may determine that a name is inappropriate and require a change; this decision may be challenged in court. The registrar also has the authority to refuse registration for a name that contravenes the law.
Name changes must be published in the Official Gazette.
Fines are prescribed for submitting incorporation documents contrary to law or acting contrary to the company type and articles.
A limited company’s articles must include at least the following:
(a) where the company has par-value shares, the share capital for each class of such shares;
(b) where the company has no-par-value or stated-capital shares, the maximum number of shares of each class, and, where applicable, the amount of stated capital the company is authorized to issue.
Every company must, upon request by any member and upon payment of fifty cents or a lesser amount set by the company, send copies of any memorandum and writings, if any.
It is possible to amend the articles after incorporation.
Any member’s shares or other interests in a company are personal property transferable in the manner provided in the articles and are not interests in land.
A company incorporated with unlimited liability may be converted into a limited company.
Registered Office: Within 28 days of incorporation, every company must file and register its address for service and administration. Failure to comply is subject to a fine of $25 per day.
Carrying on business under a name other than the registered corporate name is prohibited and subject to a fine.
Every company must hold an annual shareholders’ meeting. If not held, any shareholder may apply to the court to order that a meeting be called.
If less than three months have elapsed since the date the meeting should have been held, but 21 days have passed without directors calling it, a majority of the shareholders may hold the meeting. General meetings and board meetings may be held electronically.
Attendance by proxy is permitted.
Board resolutions must be in writing and signed by every director attending.
Every company must have at least one director.
Contracts on Behalf of the Company (underlined in your text):
Contracts on behalf of a company may be made as follows:
Contracts between private persons must be in writing, bear the company seal, and include the name of the authorized officer signing on behalf of the company.
A minister may appoint an inspector to investigate a company’s affairs. For share-capital companies, an application may be made by a shareholder holding one-tenth of the shares; for companies without share capital, by one-fifth of the members.
The company’s auditor prepares a report on the company’s financial position and presents it to the shareholders.
Before the annual meeting, the director must provide shareholders with the auditor’s interim financial report prepared for six-month periods at least seven days prior to the annual general meeting.
Balance sheets and financial statements must be signed by the directors.
Shareholders may agree to resolve company disputes through arbitration, and the arbitral award is binding on the shareholders and the company.
A company’s shares may be transferred to another company.
Another company type in Canada is the Community Interest Company, regulated by a separate statute.
Canadian law also recognizes the following company types:
Holding company
Extra-provincial corporation
Federal corporation
Financial institution
Foreign corporation
Credit /credit institution
Trust company
Private investment holding company
Limited Partnership Agreement Must Include:
(a) the firm name under which the limited partnership will carry on business;
(b) the nature of the business;
(c) the name and residence of each partner;
(d) the term for which the limited partnership is to exist;
(e) the amount of capital and, where applicable, the nature and fair value of any other property contributed by each limited partner;
(f) where applicable, the amount of any additional contributions to be made by each limited partner and the time or events upon which additional contributions will be made;
(g) where provided, when each limited partner’s contribution is to be returned;
(h) the share of profits or other compensation by way of income to which each limited partner is entitled;
(i) where provided, a limited partner’s right to substitute an assignee as a limited partner and the terms of substitution;
(j) where applicable, the right to admit additional limited partners;
(k) where provided, any preference rights granted to one or more limited partners regarding return of contributions or compensation by income, and the nature of such preference;
(l) where provided, the right of the remaining general partner(s) to continue the business upon the death, retirement, or mental incapacity of a general partner; and
(m) where provided, the right of a limited partner to demand and receive property other than cash in return for the partner’s contribution.
A person may be both a general partner and a limited partner in the same limited partnership at the same time.
A limited partner has no liability beyond the capital the partner has agreed to contribute to the partnership.
JOINT-STOCK COMPANY (ANONİM ŞİRKET)
A joint-stock company consists of two or more persons.
Natural persons or companies may come together to form a joint-stock company.
Shareholders are decision-makers and are responsible for the company’s losses.
The company’s name must include the name of one of the shareholders.
For tax purposes, there are different corporate types. At the end of the fiscal year, you must the type that accurately describes your corporation. The type determines eligibility for certain rates and deductions.
Canadian-Controlled Private Corporation (CCPC)
This is a corporation resident in Canada, controlled by Canadians, with its central management and control in Canada.
Generally, corporations must pay their taxes by instalments. Any balance is due two or three months after the end of the tax year, depending on the balance due date.
Each shareholder must also submit financial statements or copies of the forms applicable to their situation (computer-generated versions of these forms are acceptable).
CANADIAN VISA AND CITIZENSHIP PROCEDURE
Applications may be made to travel, study, work, or reside in Canada.
Canada also provides refugee protection.
To become a Canadian citizen, you must:
be a permanent resident;
have lived in Canada for at least 3 of the last 5 years (1,095 days);
have filed your taxes;
pass the citizenship test; and
prove language ability in English or French.
PUBLIC PROCUREMENT
Public procurement in Canada is legislated and guided by directives and guidelines from the Treasury Board and Public Services and Procurement Canada, as well as by various international and domestic trade agreements and statutes.
A Supply Manual has been prepared and is used as a reference.
Other departments and agencies are encouraged to use this Supply Manual as general purchasing reference material. Some Supply Manual policies and procedures apply only to Public Services and Procurement Canada.
Public procurement is carried out in a decentralized manner in Canada. Each department tenders and contracts for the services, goods, and construction it requires under its own authority.
A common principle applies to all public tenders: integrity encompassing openness, fairness, and honesty.
Except for specific exceptions, the tendering process must be competitive, and each bidder must compete under the same conditions.
If, while a tender is ongoing, the contracting authority suspects the integrity of the process has been compromised, the process must be suspended until the issue is resolved.
Except for construction, architectural, and engineering services tenders and direct procurements, contracting officers must use standard forms.
Under bilateral or multilateral free trade agreements to which Canada is a party, special provisions set out the conditions under which natural and legal persons from certain countries may participate in tenders.
An ombudsman for procurement has been established to resolve complaints regarding tenders below certain monetary thresholds.
A bidder is responsible for the costs of pursuing any legal remedies related to the tender process.