Eligible International Business
Qualifying activities are international in nature—one side of the transaction must be conducted with, for, or on behalf of a non-resident to be eligible for the International Business Activity (IBA) tax incentive program. Companies can register a business or part of a business in the IBA program.
- Accepting or making loans and deposits in any currency to or from a non-resident (arm’s length only);
- Guaranteeing payment of a debt, if all debtors or creditors are non-residents;
- Using a non-resident broker, such as an investment banking affiliate, to underwrite Canadian issues to be sold to non-residents or non-resident issues to be sold to Canadians or non-Canadians;
- Foreign exchange dealing for, or on behalf of a resident or a non-resident (restricted to financial institutions and companies whose primary business is foreign exchange);
- Managing foreign exchange for non-residents;
- Issuing and accepting letters of credit or handling documentary collections in respect of a transaction where not more than one party is resident in Canada (restricted to financial institutions);
- Trustee of a non-resident trust, guardian of a non-resident minor, or executor of an estate of non-residents (restricted to financial institutions);
- Dealing in securities with a non-resident person or broker (restricted to registered securities dealers and financial institutions);
- Dealing in securities as agent for a resident for securities not listed on a Canadian exchange (restricted to registered securities dealers and financial institutions);
- Dealing in short-term securities with a non-resident person or broker.
Financial Management and Investment
- Managing, for a fee or commission, investments for non-resident persons
- Providing financial advice to a non-resident, either an affiliate or a client (this excludes legal, accounting or tax advice provided by a corporation in the business of providing that advice);
- Preparing financial research for a non-resident, either an affiliate or a customer (this excludes legal, accounting or tax research provided by a corporation in the business of providing that research);
- Acting as principal in trading short-term debt securities (other than derivatives) with a non-resident person or broker;
- Managing a portfolio for a Canadian affiliate that consists of investments in securities issued by a non-resident and not listed on a Canadian exchange;
- Managing a portfolio consisting of foreign or Canadian investments for a non-resident affiliate;
- Leasing property to a non-resident by means of a direct finance lease;
- Insuring or reinsuring risks (other than life, sickness, or accident) related to non-residents and property or events outside Canada including captive insurance arrangements.
- Administrative support services directly related to a financial activity of a non-resident;
- Back-up office services, equipment and premises provided to a non-resident to continue business operations in the event primary equipment or premises become temporarily unusable.
Accounts Receivable (Factoring for Exports)
- Factoring accounts receivable from a non-resident and purchased without recourse;
- Collecting trade accounts receivable from non-residents for a non-resident affiliate or customer.
- Life science and green-related patents—those related to power generation using forces of nature such as wind, solar and tidal. In 2009, fuel cell technology and wastewater treatment were added as eligible patents.
- Activities related to these patents:
- Selling, assigning, or licensing a prescribed patent to a non-resident;
- Selling a good or service to a non-resident where the revenue is based on an invention for which a prescribed patent is owned by the corporation;
- Licensing to a non-resident person includes a joint research and development licensing agreement that is directly related to a patent within an eligible class of patents.
- Distributing film and television rights outside Canada, including ancillary rights.
The International Business Activity (IBA) program is administered by the BC Ministry of Finance. For more information regarding the legislation or provincial registration, please visit their website. The information on this website is provided for convenience and guidance only and is not a replacement for the legislation. Businesses considering accessing the benefits under the International Business Activity Act should consult with their professional advisors on the applicability of the legislation to their particular circumstances.