Page 1 Establishing Business in Canada Brion Hendry, CPA, CA Partner BDO Canada LLP May 16, 2016 Leon Efraim Partner Thomas, Efraim LLP Barristers & Solicitors

Soft Landing Page 2 What do I need to know to set up in Canada How to enter Canada Incorporating - Understanding your liability Understanding your compliance requirements Taxation Finance - Opening a bank account Different sources of financing available Financial reporting requirements

Soft Landing Page 3 How to enter Canada How to enter into Canada: Visitor □ Electronic Travel Authorization (ETA) □ Visitor Visa Immigration Categories: □ Refugee □ Student or Temporary Worker Visa □ Permanent Resident □ Citizen Immigration Programs: □ Immigrant Investor □ Self Employed □ Express Entry □ Family Sponsorship

Different types of Business Entities □ Sole Proprietorship □ Partnership □ Corporation □ Limited Partnership □ Joint Venture Soft Landing Page 4

Taxes – What do I need to be aware of? Overview of the Canadian Tax System Corporate Tax Value added tax (HST, GST, PST) Payroll Tax Personal Tax Soft Landing Page 5

Overview of Canadian Tax Canada is a federation made up of 10 provinces and 3 territories Federal and provincial governments each have taxing jurisdiction Federal tax applies throughout Canada Provincial tax is imposed on activities within the province Most provinces have a collection agreement with the federal government who administers collection of tax Corporations are subject to the following taxes: -Canadian federal income tax; -Federal goods and services tax (GST or HST); -Social security tax; plus -Provincial taxes of varying nature Soft Landing Page 6

Corporate Tax Corporate tax – every corporation within Canada is required to pay tax on all taxable income based on established rates Corporate Tax Returns T2 – due 6 months after the Corporate year end -Note any taxes payable are due within 2 or 3 months after the Corporate Year End All books and records supporting the Tax Returns must be held for a period of 7 years after year end Differences between Brazil and Canadian Corporate Tax Soft Landing Page 7

Value Added Tax (HST/GST/PST) Types of VAT: HST – Harmonized Sales Tax GST – Goods and Services Tax PST – Provincial Sales Tax VAT – depends on the provinces you are operating in Annual sales determine reporting period: HST (Ontario) reporting periods are: -Monthly (annual taxable supplies of greater than $6m) -Quarterly (annual taxable supplies of > $1.5 m and < or equal to $6m) -Annually (annual taxable supplies of less than $1.5, quarterly instalments may be required) Soft Landing Page 8

Payroll Tax Each Corporation providing salaries and/or wages to employees is required to register for Payroll. The Company is required to withhold from the employee and remit: CPP – Canadian Pension Plan – Employee and Employer Portion EI – Employment Insurance – Employee and Employer Portion Income tax – Employee Portion Where applicable (Total Salaries and Wages above $400,000 CDN) EHT – Employer Health Tax – specified percentage must be paid Soft Landing Page 9

Personal Tax Each person residing in Canada and considered to be a Canadian resident must file a personal tax return (T1). Employee – Returns and payments are due April 30 of the following year Self Employed – Returns are due June 15 of the following year, payments are due April 30 Soft Landing Page 10

Cash flow & Finance A corporation will be required to open a Canadian based bank account (currency can be chosen but typically are CDN or US Dollars). Several financial institutions to refer to within Canada that provide this service Financing your business: -Traditional lending from banks/financial institutions -Public equity markets -Private equity markets -Parent lending/capital lending -Canadian Government incentives (Provincial/Federal) Soft Landing Page 11

Overview of Financial Set Up Corporate Structure Movement of funds (transfer pricing, thin cap rules) Taxation requirements Financial institutions Managing cash flow -Opening a bank account -Financing opportunities Soft Landing Page 12

Financial Reporting Requirements For Profit Entities: -Public Companies (listed on an exchange) are required to follow the reporting requirements of that exchange. Accounting frameworks: - IFRS – International financial reporting standards – same as the BR GAAP - ASPE – Accounting Standards for Private Enterprises Financial Statement Assurance Services - Positive - Audit: Public Companies, banking/financing requirement - Negative - Review: banking/financing requirements - None - Compilation: Internal reporting, banking/financing requirements Soft Landing Page 13

Question and Answer Soft Landing Page 14