FAQ

Corporate Questions

What are the benefits of incorporation?

Limited liability: potential loss limited to amount invested in the corporation.

Perpetual existence: corporation continues on after the death of the individual.

Tax advantages: accountants will recommend incorporation once revenues reach a certain point.

Raising capital: corporate form of business organization easier to raise capital through the sale of shares.

What are the benefits of incorporating at the federal level instead of the provincial?

Heightened name protection: Corporations Canada applies very tough tests before granting a company the right to use a particular name. When a company’s name is approved, it’s protected across the country – a status second only to trade-mark protection. (Please note that the Province of Quebec does not currently provide data to NUANS. For your own protection, if you are doing, or intend to do business in the Province of Quebec, you should search the Quebec corporations database at Registraire des entreprises du Québec as well.

Right to carry on business anywhere in Canada: Federally incorporated companies can carry on business anywhere in Canada, and the CBCA does not set restrictions regarding the province or territory where the head office is located, corporate records are maintained and annual general meetings are held.

Recognition: Federal incorporation is often considered a sign of distinction, companies incorporated under the CBCA receive global recognition as Canadian companies.

Excellence in Client Service: Corporations Canada offers high quality service: it offers clients an online service that allows you to send documents, pay fees, and receive documents and acknowledgments back from the Director under theCBCA, via the internet.

What are the biggest mistakes new business owners make?

Not doing market research.

Just because you have a great idea doesn’t mean you have a business. The Hollywood belief that “If you build it, they will come” does not apply here. Taking a business idea to an informal focus group of friends and colleagues is a good start.

Thinking that business plans are only for the big guys.

It’s a sad fact that many new business owners don’t see this obvious relationship between planning and success. They think they can “wing it” and make their plans as they go along. Some feel that a business plan would limit their creativity or spontaneity, or that their business isn’t large enough or complex enough to warrant a plan. Every business can benefit from a business plan, no matter what size it is. The process of making a plan organizes your thinking and helps you sort out your priorities.

Thinking you can do it all by yourself.

Working solo is not working alone. Success depends on developing and using a network of colleagues, friends, mentors and professionals that can provide advice, assistance and direction in tough times.

Thinking that success will come quickly or easily.

There are a lot of myths bound up with the concept of starting a business. Success takes long hours, strategic planning, and a commitment to the work involved. The rewards are great, but the effort is, too.

Is an oral contract legally enforceable?

Generally speaking an oral contract is indeed legally enforceable (although for most complicated contracts such as those in complex commercial transactions, the contractual parties usually create agreements in writing in order to avoid any dispute regarding the terms). However, certain types of contracts, for example those creating rights and obligations in and over real property, must as a matter of law be in writing to be legally enforceable.

What remedies are available in a breach of contract situation?

The remedies available in a breach of contract action include:

  1. Damages, i.e. monetary compensation;
  2. Specific Performance, i.e. an order of the court compelling a party to honour his promises; and
  3. Injunction, i.e. an order of the court prohibiting a party to do certain acts.

Immigration Questions

What is a Canada Immigration Visa?

A Canada Immigration (Permanent Resident) Visa is a document which allows a person to live and work anywhere in Canada, and confers upon that person Permanent Resident status. It comes with certain responsibilities and may be revoked if the holder does not meet Canadian residency obligations, or is found guilty of serious criminal activity. A person who is a Canadian Permanent Resident may apply for Canadian Citizenship after 3 years.

How is a Work Permit different from a Canada Immigration Visa?

A Work Permit allows an eligible visitor to reside and work in Canada for a limited period of time, and restrictions are usually placed on the type of employment which can be pursued. It will not, by itself, lead to Canadian Permanent Resident status. By contrast, a Canada Immigration Visa entitles its holder to live and work anywhere in Canada, enjoy many of the privileges of Canadian Citizenship, apply for Canadian Citizenship after 3 years and sponsor family members for Canadian Permanent Resident status.

Can I apply for Permanent Resident status and Temporary Status at the same time?

You can apply for Permanent Resident status and Temporary status at the same time. Canadian Immigration policy recognizes the concept of dual intent.

Is my current immigration status relevant for Canadian Immigration purposes?

Yes and no. As a general rule, you must submit your Canada Immigration Visa Application (Application for Permanent Residence in Canada) to the Canadian Immigration Visa Office responsible for the country of your citizenship or to the visa office responsible for the country you are currently residing in if you have been legally admitted to that country for at least one year.

An exception to the general rule exists in the filing of certain applications under the Federal Skilled Worker category of Canadian immigration. Applicants in this category must submit their initial application to the Central Intake Office (CIO) in Sydney, Nova Scotia, wherever they may be physically located.

I have heard that Canada Immigration Regulations and laws have changed. How will I be affected?

Canada immigration regulations, laws and policies are constantly subject to change. The effect of these changes will vary considerably from one applicant to another, depending on the particular circumstances. The last significant change took place on June 26, 2010, at which time the Canadian Minister of Immigration announced important modifications to the Federal Skilled Worker category of Canadian immigration.

Real Estate Questions

What are the costs associated with the purchase of a Home?

The costs associated with the purchase of a new home are costs incurred in addition to the down payment you are required to provide. So, the first cost to you is the amount of the down payment you need. Regular (“conventional”) mortgage require you commit 20% of the house price. If you cannot afford that and otherwise qualify for a lower down payment insured mortgage then your down payment commitment can be as low as 5% of the purchase price.

Secondly, it is advisable to conduct a home inspection just following the signing of the agreement of purchase and sale. Paying the Home Inspector is your responsibility. It is recommended that an inspection is conducted to enable you discover any hidden defect(s) that might need to be repaired or replaced by the sellers before closing. Also, inspection helps to ensure that the house has no structural defects which may prove to be a good ground not to purchase the house.

Actual Closing Costs:  Generally speaking you are advised to set aside at least 2.5% of the purchase price to cover the closing costs associated with the purchase of the house. You are responsible for paying the Land Transfer Tax. Note that you might be eligible to get a land transfer tax rebate as a first time home buyer in British Columbia and also if you are buying in Vancouver. You will also be responsible for paying the fees and disbursements for the real estate lawyer . The typical disbursements included in the calculation will be; title search fees, title Insurance, registration fees, courier. You can visit our fee quote page to get a fee certificate for your transaction. In that way you will not second guess yourself as to the cost of your transaction .

What are the typical closing costs that I might have to pay as a Seller?

The following is a list of some of the typical closing costs when selling a home:

  • real estate commission plus 5% GST;
  • lawyer’s fee (discuss this with your lawyer);
  • miscellaneous charges incurred by your lawyer; e.g., courier services, title search, ordering copies of encumbrances, photocopying, fax charges, etc.;
  • your portion of any property taxes if possession date is before June 30th unless you are rural;
  • mortgage discharge fees for any mortgage on your property (your bank and Land Titles both will have discharge fees);
  • any penalty for discharging your mortgage earlier if you have a closed mortgage;
  • interest on your mortgage between possession date and when Land Titles office registers the transfer;
  • interim financing costs if you are also purchasing a home;
  • costs of discharging any judgements, builders’ liens against your home; and,
  • all utilities will have to be paid up to the date of possession.
What is the standard commission rate?

There is no standard commission rate – it is completely negotiable between the seller and the listing salesperson/brokerage firm. The commission rate can either be a percentage of the selling price or a flat fee.

What is title insurance?

Title Insurance is a form of Insurance that protects both the home owner and the lender from unseen defects in title of the purchased or mortgaged house. This Insurance guarantees that the home owner and the lender will be compensated (“indemnified”) for any cost suffered as a result of undiscovered defects in title during closing. For more information about tile insurance visit our -Title Insurance page.

Can I use my RRSP as a down payment?

Yes. As a First Time Home Buyer you can “borrow” money from your RRSP up to $20,000.00 ($40,000.00 if you are a couple) without any penalty and use towards your down payment for the purchase of your house. By so doing, you have 15 years to pay back the amounts borrowed into your RRSP account.

Estate Planning Questions

What is Estate Planning?

Put in its most simple terms, estate planning involves putting your affairs in order so as to maximize the benefits that your assets can provide to you during your life and to those you desire to benefit from it after your death. Estate planning is a process that has three objectives in mind:

  • To insure that your assets will pass at your demise to those persons you designate in a manner which will give them the maximum benefits;
  • to reduce or eliminate the tax burden on your estate; and,
  • to provide for the passing of your assets at your demise to your chosen beneficiaries without the necessity of probate and without its costs, time delays, and inconveniences.
What does a proper Estate Plan include?

A proper estate plan to provide for the needs of your family may include:

  • An adequate Will or Trust;
  • A written agreement concerning the status of your assets;
  • A directive to your physician or an Enduring Power of Attorney; and,
  • Final instructions of your preference.
Trusts – What are they?

A trust document is an agreement between three people dealing with assets.

  • The Trustor is the creator of the arrangement who appoints a
  • Trustee to hold the legal title to the subject assets for the benefit of the Beneficiary.

Although there are certain legal limitations, it is possible for the Trustor and Beneficiary to be the same person and is even possible for the trustor to serve as his own Trustee. In some situations, Trustors may wish a bank or other entity to serve as the Trustee.

What are the benefits of having a Trust?

Trusts offer a number of important benefits:

  • Probate avoidance;
  • Capital Gain Tax Savings;
  • Retention of privacy of family assets and finances;
  • Avoidance of conservatorship;
  • Creditor protection for your beneficiaries;

Control of distribution and management of assets during life and after death;

What happens if you die without a Will?

Each province has a statute that provides the answer. These statutes govern the distribution of assets where there is no Will. These rules are called the rules of intestacy. There is no discretion or flexibility in distribution of the assets as can be provided for in a Will. These rules of intestacy are not considered adequate as they are “one size fits all”.