Canada

Currency

Canadian Dollar (CAD)

Payroll Frequency

Monthly

Employer Taxes

5.70%

About Canada

Canada is the second largest nation in the world, by land mass, and also one of the most sparsely populated. It has a multicultural society that is accommodating to immigrants and exports a great wealth of natural and intellectual resources. As a result of its colonial history, Canada has two official languages, English and French. It is also a Commonwealth state that obtained self-governance in 1931 and full legislative power in 1982. Canada has the longest shoreline in the world and only borders one country, the United States of America.

Canadian culture is different from that of the United States in that Canadians are known more for their community-oriented and peacemaking preferences in governance and society. They also show little regard for social classes while continuing to strive for personal and familial success, ideally without extracting social cost. They are also known for exhibiting optimism and a tendency to tolerate ambiguity. The country is divided into French-speaking and English-speaking sections, portraying cultures that resemble those of France and Britain respectively. First Nation cultures of native Indians, Inuit of the Eskimo, Southeast Asian and Latin American cultures are also represented in the country’s multicultural spectrum as well as those from other European countries.

Company Formation Services in Canada

Aadmi streamlines Canadian company incorporation services and makes it even easier and convenient. The procedure entails the federal or provincial registration of a business, selecting the appropriate structure (sole proprietorship, partnership, or corporation), and making it fully compliant with Canadian business regulations. A corporation is the most common choice for most entrepreneurs in Canada because of its credibility, limited liability protection, and possible tax advantages.

With our professional expertise, establishing your business in Canada is seamless, keeping you on the right track and growing.

Company Types

Limited Company

A Limited Company in Canada is a business that is incorporated with its own legal identity, independent of its owners. Shareholders can only be held liable for the company’s debts to the extent they invested in it. It may either be a private or public company and is subject to federal or provincial incorporation laws. A minimum of one director is needed, who may be a non-resident based on the province of incorporation.

Branch Office

Foreign companies may set up a branch office in Canada, which is not an independent legal entity but part of the parent company. The parent company will be responsible for the debts and liabilities of the branch. It is a more formal structure, and registration is done with the provincial authorities, and compliance costs may be higher.

Partnership

A partnership is created when two or more persons or entities, both foreign and Canadian partners, come together to do business. Partnerships can be general or limited in Canada. In a general partnership, liability and profit are shared by all partners. In a limited partnership, the liability of one or more partners is limited. This structure facilitates shared control, cost, and access to local networks.

Incorporation Requirements

Paid-Up Capital

There is no minimum paid-up capital to form a company in Canada.

Foreign Percentage Ownership

Canada permits 100% foreign ownership of a corporation. After incorporation, the organization is subject to Canadian federal or provincial law.

Local Director

Some provinces, such as British Columbia, permit all directors to be non-residents, but others, such as Ontario, require at least 25% of directors to be Canadian residents.

Corporate Secretary

A Corporate Secretary is not required in Canada, but may be appointed by corporations for governance reasons.

Address of the Local Office

You must have a registered office address within Canada, and it has to be a physical location (not a P.O. Box) and within the jurisdiction of incorporation.

Incorporation Documents

What are the Company Incorporation Documents to file?

Name of the suggested corporation

Articles of Incorporation

Registered office address

Directors’ names and addresses

Incorporator’s name and address

Share structure and shareholder information

NUANS (name search) report for federal or some provincial incorporations

Incorporation Process

Register and Reserve the Company Name

There is a requirement for a NUANS (Newly Upgraded Automated Name Search) report to verify that the name is unique. The name can then be registered as part of the incorporation once confirmed.

Choose Filing Method

Federally, corporations can be incorporated through Corporations Canada or provincially through the relevant provincial authority. Filing may either be done electronically or by mail. Electronic filing is usually quicker and smoother.

Prepare Incorporation Documents

Prepare and file Articles of Incorporation, NUANS report, and incorporation application. There is a filing fee in each jurisdiction.

Corporate Registry

Federal incorporations are administered by Corporations Canada pursuant to the Canada Business Corporations Act (CBCA). Provincial incorporations are administered through each province’s business corporations act (e.g., Ontario Business Corporations Act).

Bank Account

Incorporation documents, director and shareholder identification, and a Canadian address will be required to open a corporate bank account. Local signatories and in-person visits may be required by some banks.

Statutory Registrations

Canada Revenue Agency (CRA)

After being incorporated, you will need to register for a Business Number with the CRA. Through it, you can register for corporate income tax, payroll deductions, GST/HST, and import/export accounts.

Goods and Services Tax (GST) / Harmonized Sales Tax (HST)

You need to register for GST/HST if your taxable revenues are more than CAD 30,000 per year.

Payroll Deductions

Employees should register with the CRA in order to deduct employee income tax, Canada Pension Plan (CPP), and Employment Insurance (EI).

Provincial Taxes

Certain provinces have supplementary tax registration for provincial sales tax (PST) or Quebec Sales Tax (QST).

Workplace Pensions

Contributions to the Canada Pension Plan (CPP) by employers are required for eligible workers. Quebec has its own plan referred to as the Quebec Pension Plan (QPP).

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Employment Relationship

• Permanent Employment

The Labour Code of Canada specifies four main categories under the permanent employment designation. Those categories are: full-time, part-time, casual, and managerial/professional. Although all of these are covered in the Labour Code, there is no statutory distinction made between them. Full-time employees are generally considered to be permanent employees who work 30 or more hours a week.

• Fixed-Term or Specific-Purpose Contracts

In Canada, an employment contract can be either written or verbal – both are equally binding and enforceable. Employers are prohibited from entering into solely non-compete agreements or contracts containing non-compete agreement clauses. Non-solicitation clauses are not included in the mandate. Since June 2022, Quebec has strengthened its Charter of the French Language, reinforcing French as the province's official language. Employers must offer employment contracts in French by default, as well as posting job advertisements in French.

• Temporary Employment Contratcs

Canada's Labour Code does not differentiate between permanent and temporary employees. All employees are protected under the law. A temporary job has a set termination date or ends upon the completion of a project or the attainment of a goal. Temporary employment is categorized into 3: seasonal (lasting for limited periods at the same time every year), contractual (fixed end-date) and casual (with varying work hours every week and no fixed schedules). Temporary help agencies and recruiters are prohibited from operating without a license for that purpose. A prohibition against knowingly engaging or using the services of an unlicensed temporary help agency or recruiter is included.

Probationary Period

Canada's Labour Code allows termination without notice or severance within three months of the beginning of an employee's contract. A probationary period is set at the provincial level. Statutory probationary periods are set by each province, ranging from 29 days to 12 months.

Working Hours

The statutory hours for employees are eight per day or 40 per week. The maximum number of hours of work permitted per week is 48. Where the nature of work in an industrial establishment necessitates irregular distribution of employees' working hours, daily and weekly hours may be calculated as an average for a period of two or more weeks. Regulations allow for different standard working hours for certain industries and types of work. During a week when one or more holidays occur, the standard hours of work are reduced by eight for each holiday. Employers must create a policy with general rules on respecting employee’s time outside of working hours. If there are any exceptions to the rules, they must be outlined and justified in the policy. The policy should state the date that the policy comes into effect.

Holidays / PTO

• Statutory Holidays

2026

January 1 - New Year's Day
April 3 - Good Friday
April 6 - Easter Monday
May 18 - Victoria Day
July 1 - Canada Day
September 7 - Labour Day
September 30 - National Day for Truth and Reconciliation
October 12 - Thanksgiving Day
November 11 - Remembrance Day
December 25 - Christmas Day
December 26 - Boxing Day

2027

January 1 - New Year's Day
March 26 - Good Friday
March 29 - Easter Monday
May 24 - Victoria Day
July 1 - Canada Day
September 6 - Labour Day
September 30 - National Day for Truth and Reconciliation
October 11 - Thanksgiving Day
November 11 - Remembrance Day
December 25 - Christmas Day
December 26 - Boxing Day

• Paid Annual Leave

Duration and pay for annual leave differ provincially. In most provinces, employees are entitled to a minimum of 2 weeks of annual leave after completing 1 year of employment with the same employer. After 5 consecutive years of employment with the same employer, the entitlement increases to three weeks of annual vacation, and after 10 years – to 4 weeks. The annual leave and pay vary from province to province. Annual leave is to be taken only in one period or, if the employee makes a request in writing and the employer approves it in writing, in more than one period. Employers are required to pay employees who take vacation accumulated annual vacation pay. Any outstanding annual leave compensation must be paid to employees upon termination of employment.

• Sick Leave

Canada's national government does not mandate that all private employers provide paid sick leave to their employees. However, employers in federally regulated industries (such as the transportation, banking, port services, telecommunications, radio, and television broadcasting sectors) are required to provide their employees with paid sick leave. Effective December 1, 2022, federally regulated employers with 100 or more employees must provide employees with at least 10 days of paid sick leave. The range of sick leave entitlement on the provincial level is broad: from 3 days in Manitoba to up to 26 weeks in Quebec. Most provinces provide unpaid sick leave. Lawmakers in British Columbia have amended the province's Employment Standards Act to grant employees up to 3 hours of paid leave to receive a vaccination against COVID-19.

• Maternity Leave

The Labour Code of Canada provides a paid maternity leave of up to 17 weeks, which may begin no earlier than 13 weeks prior to the estimated date of delivery. The leave and benefits vary within provinces ranging from 16 to 19 weeks. Employees whose pregnancy ends after the 19th week of pregnancy is entitled to the same leave entitlements as an employee who has given birth because the experience "generally amounts to the same process." If the pregnancy ends anytime before the 19th week, the employee may still be entitled to leave under the "Medical Leave" provisions of the Code. This leave entitlement is available to the parents in the case of surrogacy as well. An employer cannot dismiss, suspend, lay off, demote or discipline an employee because she is pregnant, or has applied for or intends to apply for maternity or parental leave, maternity-related reassignment or leave, or modification of her job functions. Employees on maternity leave who have completed at least 600 insured hours of work in the 52 weeks before the start of their claim are eligible to receive a benefit for up to 15 weeks at the rate of 55% of their regular wages, up to a maximum of CAD 695 per week.

• Paternity Leave

There are no provisions in Canada's Labour Code for paternity leave. Employees are entitled to a parental leave that can be shared by both parents up to 35 weeks to care for a newborn child. Québec is the only province in Canada that offers paternity benefits as part of the Quebec Parental Insurance Plan (QPIP). Paternity leave may be taken by those insured by QPIP for three weeks at 75% of average weekly earnings or for five weeks at 70% up to an earnings ceiling of CAD 98,000 (Canadian dollars) per year. For uninsured employees, paternity leave is unpaid.

Termination of Employment

• Notice Period

Federally regulated employees are not required to give their employer notice if they choose to quit. However, when employers decide to terminate a position, they must either give the employee written notice or pay 2 weeks’ regular wages in lieu of notice. When employees resign or are dismissed for just causes, they are not entitled to a notice. The notice period depends on the time of service. For employees with at least 3 months of continuous service, the notice period is 2 weeks. For 3 to 8 years of service, the notice period is 1 week of notice per year of continuous service. In the case of collective dismissals of over 50 employees, an additional notice of 16 weeks is required.

• Severance Benefits

Employees in Canada are entitled to severance pay if they have completed at least 12 consecutive months of continuous employment before the layoff or dismissal resulting in termination. The severance pay is calculated as two days' regular wages for each full year worked before termination of employment. The minimum benefit is five days of wages. Severance pay eligibility and benefits may differ by province. And in Ontario, there is a distinction between severance pay and termination pay. In that province, employees are eligible for severance pay if they have at least 5 years of service and the employer has a global payroll of at least $2.5 million or severed the employment of 50 or more employees in a 6-month period because all or part of the business permanently closed. Employees dismissed for just cause are not entitled to severance pay. Termination Pay Termination pay in Ontario is given in lieu of the required notice of termination, and it has eligibility requirements and a payment calculation that differ from severance pay. The notice required to terminate an employee in Ontario (and therefore the amount of termination pay) depends on the duration of employment.