A client is the sole shareholder of a corporation located in PEI (incorporated under PEI Business Corporations Act). It has operated there for many years. The shareholder is contemplating moving to Ontario, but continuing to operate the business in PEI. Are there any pitfalls that could arise if the Head Office address reads ON, but the operations are in PE?
Clearly, HST sales are calculated at PE rates, while ITCs are calculated at a combination of PE & ON rates (depending on where purchased). Corporate taxes calculated at PE rates. Personal taxes of shareholder calculated at ON rates. T4’s based on PE residency of employees.
Other considerations, either tax-related or otherwise? Thanks for your comments.
Legal: Need to speak to a lawyer for a multi-jurisdiction registration. PEI and ON
Income Tax: Where is the permanent establishment of the business located? Or are there two permanent establishments?
Sales Tax: Read about “Place of Supply Rules” as it can get complicated when the supply is intangible, and multiple provinces get involved. Even tangible supplies can get caught up. Not enough info to understand enough.
T4: Wrong, T4’s are based on the Employment Province of the employees, not the Permanent Establishment (though it could be the same thing.) That is not always where the employee or employer is located. In the NCR region, we have a number of people who are employed in a different province than where they live and where HR is located.