Federal vs. Provincial Incorporation

Corporations can be established either at the federal level, or in any individual province. They can be continued in additional jurisdictions, as required. One question I’m often asked is, “What is the difference between incorporating federally or in one of the provinces?” The truth is that, from a tax perspective, it doesn’t really matter. Taxation is driven by the location of the corporation’s permanent establishments, not by where it was incorporated. However, from a legal perspective there are many subtle differences between the various jurisdictional options.

While it’s difficult to summarize all the differences between the jurisdictions, our friends at Houser, Henry & Syron LLP have put together a helpful guide to the differences between federal incorporation and incorporation in Ontario.

While this guide is useful to get a broad understanding of the differences, it’s important to consult with legal counsel before making any decisions. Governance structures are important to get right from the beginning to avoid costly administrative changes down the road.