You may have read or heard that there are tax benefits for businesses in Canada that qualify as a Canadian-controlled private corporation (CCPC).
The rules for qualifying as a CCPC are as follows:
- The corporation must be privately held
- It also has to meet all of the following conditions (T4012 – T2 Corporation – Income Tax Guide)
- The corporation was resident in Canada and was either incorporated in Canada or resident in Canada from June 18, 1971, to the end of the tax year
- It is not controlled directly or indirectly by one or more non-resident persons, a public corporation, a corporation that has a class of shares listed on a stock exchange, or any combination of the these
- If some of the shares are owned by a non-resident person, a public corporation or a corporation that has a class of shares listed on a stock exchange, that shareholder (person or corporation) cannot own sufficient shares to control the corporation
- No class of its shares can be listed on a designated stock exchange
If a business qualifies as a CCPC it may be eligible for the tax benefits of the Small Business Deduction.