Type of Corporations

Generally speaking, all corporations fit into one of three types, Canadian Controlled Private Corporations, Private Corporations or Public Corporations. The way these corporations pay taxes is all different.

Canadian Controlled Private Corporation (CCPC)

As per the CRA website: “For your corporation to be considered a CCPC, it has to meet all of the following requirements at the end of the tax year:

  • it is a private corporation;
  • it is a corporation that is resident in Canada and was either incorporated in Canada or resident in Canada from June 18, 1971, to the end of the tax year;
  • it is not controlled directly or indirectly by one or more non-resident persons;
  • it is not controlled directly or indirectly by one or more public corporations (other than a prescribed venture capital corporation, as defined in Regulation 6700 of the Income Tax Regulations);
  • it is not controlled by a Canadian resident corporation that lists its shares on a designated stock exchange outside of Canada;
  • it is not controlled directly or indirectly by any combination of persons described in the three preceding conditions;
  • if all of its shares that are owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation with a class of shares listed on a designated stock exchange, were owned by one person, that person would not own sufficient shares to control the corporation; and
  • no class of its shares of capital stock is listed on a designated stock exchange.”

More simply put, a CCPC is a corporation that is owned and controlled by Canadian residents (either corporations or individuals).

Other Private Corporation

As per the CRA website: “To be considered an other private corporation, the corporation has to meet all of the following requirements at the end of the tax year:

  • it is resident in Canada;
  • it is not a public corporation;
  • it is not controlled by one or more public corporations (other than a prescribed venture capital corporation, as defined in Regulation 6700 of the Income Tax Regulations);
  • it is not controlled by one or more prescribed federal Crown corporations (as defined in Regulation 7100); and
  • it is not controlled by any combination of corporations described in the two previous conditions.”

Again, simply a private corporation is basically one which does not meet the criteria of a CCPC and is not publicly owned (traded on a public stock exchange) or owned by a crown corporation.

Public Corporation

A public corporation is a corporation which has shares on a public stock exchange. Per the CRA website: “Your corporation is a public corporation if it is resident in Canada and meets either of the following requirements at the end of the tax year:

  • it has a class of shares listed on a designated Canadian stock exchange; or
  • it has elected, or the Minister of National Revenue has designated it, to be a public corporation and the corporation has complied with prescribed conditions, under Regulation 4800(1) of the Income Tax Regulations, on the number of its shareholders, the dispersing of the ownership of its shares, the public trading of its shares, and the size of the corporation.”