Branch tax (Part XIV)

A non-resident corporation selling a Canadian branch business meets this term when working out the tax on the sale and on what stays in the country. The tax is imposed by section 219, which sets the rate and the calculation, so read the section for current figures.

How the calculation starts

Under s. 219(1), the base begins with the corporation’s taxable income earned in Canada and adds items, including the amount by which its taxable capital gains from dispositions of taxable Canadian property (read narrowly under s. 219(1.1)) exceed the losses and deductions paragraph (d) lists. It then subtracts a proportion of its taxes under Parts I, I.3 and VI and its provincial income taxes, and the other amounts the subsection lists. It also has items for certain transfers of property used in a business carried on in Canada to a qualified related Canadian corporation for consideration that includes shares.

Exceptions and questions

• Section 219(2): no tax for a corporation whose principal business throughout the year was transporting persons or goods, communications or mining iron ore in Canada, or one exempt under section 149
• Sections 219(4) to (5.2): different rules for non-resident insurers
• Ask whether a tax treaty or a Canadian subsidiary structure changes the position

See also taxable Canadian property and the answer on how a non-resident reports the sale of a business.