What is a Canadian Controlled Private Corporation (CCPC)

A Canadian-controlled private corporation (or CCPC) is the assessment (for tax purposes) of a corporate entity’s structure to enable that corporation to receive preferential tax treatment.
The criteria for Canadian-controlled private corporation or CCPC status is defined in section 125(7) of the Income Tax Act, which effectively requires the corporate entity to meet all of the following requirements at the end of the tax year:
• it is a private corporation
• it is a corporation that was resident in Canada and was either incorporated in Canada or resident in Canada from June 18, 1971, to the end of the tax year
• it is not controlled directly or indirectly by one or more non-resident persons
• it is not controlled directly or indirectly by one or more public corporations (other than a prescribed venture capital corporation, as defined in Regulation 6700 of the Income Tax Regulations)
• it is not controlled by a Canadian resident corporation that lists its shares on a designated stock exchange outside of Canada
• it is not controlled directly or indirectly by any combination of persons described in the three previous conditions
• if all of its shares that are owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation with a class of shares listed on a designated stock exchange were owned by one person, that person would not own sufficient shares to control the corporation
• no class of its shares of capital stock is listed on a designated stock exchange
As a Canadian-controlled private corporation, the corporation will be entitled to claim preferential tax treatment, including, but not limited to:
• access to the small business deduction, pursuant to section 125(1) of the Income Tax Act, which significantly reduces the corporation’s effective tax rate;
• provides an additional month to pay the balance of certain taxes;
• enhanced investment tax credits for qualified expenditures on scientific research and experimental development;
• shareholder entitlement to the capital gains exemption on the disposition of qualified small business corporation shares; and
• deferral of an employee's taxable benefit arising from the exercise of stock options granted by a CCPC.
For Canadian corporate legal matters, including optimizing your Canadian-controlled private corporation, contact our law firm at [email protected] or 403-400-4092 / 905-616-8864, together with more corporate-related information at our website https://www.lawyerincorporation.com.
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