BC's Business Corporations
Act (the "Act") recently introduced
Community Contribution Companies, or CCCs.
When seeking to incorporate for a purpose that is not purely
for-profit or non-profit, it may be worth considering a CCC.
For-profit companies can operate for
the purpose of earning a profit, can distribute profits among
shareholders and are taxable entities.
Non-profit entities operate for
non-profit purposes, are prohibited from distributing profits among
members and are not subject to income tax. Non-profits may or
may not become registered charities, which can issue tax receipts
CCCs fall somewhere in between these
two types of entities. They are incorporated for purposes that are
beneficial to society or to a segment of society that is broader
than the group related to the CCC. They may distribute profits,
subject to limits set out in the Regulations to the Act (currently
set at 40% of the company's profit plus any unused dividends
from the previous financial year). They are also restricted in how
assets can be distributed on dissolution or otherwise.
CCCs must produce an annual Community
Contribution Report that is made publicly available and discloses
certain information about activities and assets of the CCC. The
contents of these reports are governed by the applicable
It is important to note that CCCs
currently are not entitled to issue tax receipts and are not exempt
from income tax. From a tax perspective, they are treated similar
to for-profit companies.
Some reasons why incorporation as a CCC
would be beneficial, despite the lack of favourable tax treatment
may include the following. When seeking public support, approaching
possible supporters may be more successful by a CCC rather than a
for-profit entity. This is because as CCCs become more common, they
may develop a reputation for benefitting the community at large,
being worthy of support. It may satisfy a supporter who seeks more
than simply fiscal efficiency, but also seeks social
responsibility. Further, a charity, which is generally prohibited
from entering into for-profit activities, may consider
incorporating a CCC as a subsidiary to run a profitable enterprise
that in turn benefits the charity.
It remains to be seen if CCCs will have
additional financial incentives available to them, such as having
access to gaming grants or provincial tax credits.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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