By Sharad Gondaliya, CPA
If you live outside Canada and want a Canadian corporation, the first decision is where to incorporate. For most of my non-resident clients, the answer is Ontario, or BC when the business will be based in British Columbia. One rule drives that answer: the federal requirement for resident Canadian directors.
The short answer
- An Ontario or BC corporation can be 100% owned and 100% directed by non-residents.
- A federal corporation needs at least 25% resident Canadian directors, and at least one when the board has fewer than four directors.
- Tax is the same in all three.
- Expanding to another province is the same process for all three.
- Federal’s one real advantage is the right to use the corporate name across Canada.
Director rules side by side
| Rule | Ontario | British Columbia | Federal |
|---|---|---|---|
| Resident Canadian directors required | None | None | At least 25% |
| Board of 1 to 3 directors | No resident needed | No resident needed | At least 1 resident Canadian |
| Minimum number of directors | 1 | 1 | 1 |
| Sole non-resident director | Allowed | Allowed | Not allowed |
| Non-resident shareholders | 100% allowed | 100% allowed | 100% allowed |
| Set up without visiting Canada | Yes | Yes | Yes, with a resident Canadian director |
Ontario removed its resident-director rule on July 5, 2021. BC has no such rule. The federal rule is still in force as of October 2026.
What the federal rule means in practice
Under the federal Canada Business Corporations Act, a resident Canadian is a citizen or permanent resident who ordinarily lives in Canada. A Canadian citizen living abroad usually does not count.
Most foreign founders do not have such a person. Incorporating federally then means paying a resident director every year. That director takes on personal liability for unremitted payroll deductions, non-resident withholding tax and GST/HST. Both continue every year.
With an Ontario or BC corporation, none of this applies. You can be the sole director yourself.
“A federal corporation can operate everywhere”
This is the most common misunderstanding I hear. A federal corporation must still register in each province where it carries on business. In Ontario, that is an Initial Return within 60 days. In BC, it is an extra-provincial registration.
An Ontario or BC corporation that expands follows the same process. For example, a corporation that starts in Ontario and opens a Vancouver office two years later registers in BC, whether it is an Ontario corporation or a federal corporation.
Both types can also sell to customers anywhere in Canada. Registration in another province is needed when you carry on business there, such as hiring staff or opening an office.
The name: federal’s one real advantage
Federal approval gives you the right to use your corporate name across Canada. An Ontario or BC name is checked only against that province’s records.
A corporate name is not a trademark, though. If your brand matters, a Canadian trademark gives stronger national protection. The government fee in 2026 is $491.06 online for the first class of goods or services.
Tax is identical
A corporation incorporated in Canada is deemed resident here for tax. If it is managed from another country, that country may also claim it and the tax treaty decides, so plan where board decisions are made. When non-residents control it, it is not a Canadian-controlled private corporation (CCPC), so it pays the general corporate rate.
| Province of operation | Combined general rate |
|---|---|
| Ontario | 26.5% |
| British Columbia | 27% |
A federal corporation operating in Ontario pays exactly the same Ontario rate. Choosing federal saves no tax.
Other differences worth knowing
| Item | Ontario | British Columbia | Federal |
|---|---|---|---|
| Government incorporation fee | $300 | $350 | $200 |
| Name search | Ontario NUANS report for a named company | $30 Name Request | Included in the online filing |
| Annual filing fee | $0 | $43.39 | $12 |
| Office address | Registered office in Ontario | Registered and records office in BC | Registered office in the province named in the articles |
| Beneficial owner information | Private register at the registered office | Transparency register at the records office | Filed with Corporations Canada; part is public |
When federal still makes sense
- A resident Canadian is already on your board.
- Canada-wide name rights matter more than cost, and a trademark is not enough.
- A regulator, lender or major customer insists on it.
If federal is essential, please read our guide to resident director services in Canada.
How we help non-resident founders
We incorporate Ontario corporations through our department Open Corporation for $35. We register all CRA accounts, provide an Ontario registered office address, and help you open a Canadian business account without visiting Canada. For ongoing work, see T2 filing for non-resident-owned corporations.
For a broader comparison, see benefits of an Ontario corporation over a federal corporation.
FAQs
Does the 25% rule apply to shareholders?
No. It applies to directors only. Shareholders can be 100% non-resident under Ontario, BC and federal law.
Do I need to visit Canada to incorporate in Ontario or BC?
No. Incorporation, CRA registrations and bank account opening are handled remotely. For the bank account, the financial institution gives final approval.
Can I move a federal corporation to Ontario later?
Yes. This is called continuance. It needs shareholder approval and filings with Corporations Canada and Ontario.
Is the tax different if I incorporate federally?
No. The corporation pays tax based on where it operates, not where it is incorporated.
Speak with a CPA before you incorporate
Please book a free consultation at gondaliyacpa.ca/consultation. We are a 2026 Xero Awarded Firm with 1300+ five-star Google reviews, and we work on AFFORDABLE flat-fee annual packages.
Sharad Gondaliya is a CPA Canada & CPA USA with 15 Years+ experience of Accounting, Tax, Payroll of Corporate Small Businesses as Tax Accountant. He is a CPA Ontario member (61040184) and holds US CPA licences in Washington and Montana and is well known among corporate small businesses for tax planning, efficient tax solutions, and affordable CPA services. Sharad is the Principal (Director) of Gondaliya CPA – Affordable CPA Firm in Canada. Licenses: CPA Ontario: 61040184 | CPA USA (MT): PAC-CPAP-LIC-033176 | CPA USA (WA): 57629 | CPA Firm License: 61330051 View Full Author Bio