Form a federal CBCA, Ontario OBCA, or BC BCBCA corporation in 5 business days. Combined corporate tax sits around 26.5%, but Canadian Controlled Private Corporations pay roughly 12% on the first CAD 500,000 of active business income, and SR&ED returns up to 35% of qualifying R&D as cash to CCPCs.
When Canada is the right call, and when it is not.
Canadian Controlled Private Corporations claim SR&ED at 35% refundable on the first CAD 3M of qualifying R&D, paid as cash even at a loss. Pair with the small business deduction (roughly 12% on first CAD 500,000 of active income) and Canada becomes one of the cheapest places in the OECD to burn engineering payroll.
A Canadian corp gives you tariff free access to US and Mexican markets under USMCA, plus a 94-treaty network including a strong Canada US treaty (reduced WHT to 5 to 15%). HST registration is single window with the CRA in most provinces.
BC and Ontario eliminated the 25% resident director rule (BCBCA 2021, OBCA 2023), so non resident founders can hold 100% of the board. Combined with the Global Talent Stream visa (2-week processing) and CDAP grants, the Toronto Waterloo and Vancouver corridors are reachable from day one.
Canada layers 5% federal GST on top of provincial PST or HST, with each province publishing its own rate, registration threshold, and audit cycle. BC, Saskatchewan, Manitoba, and Quebec run parallel regimes. Multi province sellers should expect three or four registrations.
Most US Tier 1 VCs still want a Delaware C-Corp on the cap table for §1202 QSBS eligibility and YC standard SAFEs. A Canadian CCPC loses CCPC status the moment a foreign VC takes more than de facto control, taking the small business deduction and SR&ED 35% refundable rate with it.
Working data for Canada. Cite check each figure before use.
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Each rate, threshold, and deadline below is cited from an authoritative source.
Information is provided for general guidance and reflects tax year 2025 unless noted. Specific situations require advice from a local practitioner. Always confirm against the cited tax authority and registrar before relying on a figure.