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Corporate Bank Accounts for Non-Residents in Canada
By admin | November 1, 2008
Guest Post by Aubrey Clark for PeterMacfarlane.net
Non-Residents of Canada can also open bank accounts in Canada. The unit of currency in Canada is the Canadian dollar (CAD). The Canadian dollar’s trade occurs freely on the foreign exchange markets.
The Bank of Canada is the central bank, which regulates all financial institutions in the country. Canada is also a member of the North American Free Trade Agreement or NAFTA.
Rules for Non-Residents to Open Bank Accounts in Canada:
Corporations are usually considered as residents in Canada, if they have incorporation in Canada or if they exercise management from Canada. The federal government and the provincial government impose taxes on these resident corporations, based on their worldwide income.
The rate of tax varies depending on the corporate status, type of income, and the provinces, where they carry on their businesses. The federal income tax on resident corporations is 38%, where there is a reduction by 10% for taxable income earned in a province.
Non-resident corporations conducting business in Canada through a branch need to pay taxes at full corporate rates of their net business income earned in Canada. These corporations also need to pay an additional tax of 25%. This is subject to an allowance for any investments made in Canadian property.
You need to have a bank account in Canada before starting a business in the nation. Non-residents may get a merchant account or a third party payment processor to accept credit and debit card payments on their behalf. When the card company transfers money, individuals will receive a check that might take two to four weeks to arrive depending on the location. You may then deposit the checks in the bank of your country.
The basic CAD operating bank account is also at times referred to as a demand account and resident or non-resident corporations may hold this account. Banks pay interest on demand accounts of corporations. Overdrafts are permissible, with the bank determining the amount and the rate. Offshore CAD accounts are frequent in Canada.
Resident as well as non-resident corporations can hold accounts in Canada in currency denominations other than the Canadian or US dollar.
Time deposits of up to five years, repurchase agreements and certificates of deposits (CDs) offer corporations a variety of short-term investment options. Even though, overdrafts are permissible, they are not a major source of short-term financing.
Bank finance remains a major source of funding. There is a fierce competition for the financing business or reputable firms in Canada. The competition is also highly based on price. Commercial newspapers in Canada are also a financing source for established companies.
Treasury Management:
With a small base of local corporations, the treasury management in Canada focuses on manufacturing sectors serving the U.S. and Canadian markets, Foreign Sales Corporations for U.S. multinationals, and commodity exporters. Canada is one of the founding members of the North American Free Trade Agreement. Therefore, it is an ideal point of entry into this large market for many corporations based in Europe.
Canada permits all common treasury management techniques. These include leading/lagging, re invoicing, sweeping, and cash concentration. Canada permits multilateral netting without any restrictions. Notional cash pooling for a single business entity is common and most Canadian companies make use of it. However, Canada does not permit notional cash pooling for multiple business entities. The country also allows pooling of other currencies such as the U.S. dollar for single business entities.
Multiple CAD accounts help to facilitate accounting objectives or they can be part of an overall treasury strategy. Canada allows pooling and sweeping for both residents non-residents of Canada, as they are common liquidity management tools.
Aubrey Clark is an Author and editor for Direct Banc, a directory for Low Interest Rate Credit Cards, which features tutorials and products on how consumers can get a Credit Card Balance Transfer for Life. Aubrey is a financial expert of twenty years and lives in Atlanta Georgia with his wife and four children.
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