Canadian CCPC

[basilfawlty]

Wondering if anyone knows what sort of penalties, if any, may be associated with not electing 25% Canadian resident directors to an Ontario Corporation in the event where a current sole director / 100% owner of the Ontario Corporation is no longer resident in Canada? I know that this is required. I do understand that CCPC status is no longer available, which isn't a concern in this case. More concerned around what may be the consequences of not going through the legal paperwork to make the change (which would include changes to bylaws etc, since the current setup of the corporation is set up with a Sole Director).

Understand this isn't strictly speaking a tax question, but I do believe (and am questioning) where the penalty, if any, may come from? Would this be under the purview of the CRA?

Also, if an agreement had been reached in principle to have a Cdn resident director with 1 seat and the non-resident owner hold 3 seats, but nothing had been documented, are there any issues with creating docs and backdating as of the date of the departure of the Canadian resident to the US?

Thanks!

[JGCA]

The 25% penalty you talk about has nothing to do with CRA. What you refer to is the Ontario Corporations Act requirement that was amended in 2007 to allow for only a 25% of the directors to be non resident. There is no CRA tax or penalty associated with this requirement at all, only that you may or may not be eligible for the CCPC lower tax rate and other witholding tax requirements if any.

If the Ontario corp wants to become non resident then this has to be dealt with by asking the Ontario governing body to allow the corp to be continued in the foreign jurisdiction which will require board resolutions and filings under corporate law. For tax however you need to see what affect this has on now changing to a non reesident state especially for the sole shareholder there is deemed sale of the shares once you are non resident