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Canada has no foreign exchange controls, making overseas money transfers to Canada or sending money from Canada simple. Profits from registered Canadian businesses may be transferred to foreign investors once national tax obligations are met. Only licensed Money Services Businesses (MSBs) are authorised by the Canadian Central Bank to execute financial transfers.
When transferring money from Canada or sending money to Canada, we strongly recommend using brokers who are registered with the Canadian anti-money laundering authority, the Financial Transactions and Reports Analysis Centre (FinTRAC). Created in 2000 as an independent body under the Ministry of Finance, FinTRAC regulates and monitors all money services businesses and financial transactions in Canada. Registered service providers are required to report to FinTRAC the high-value or suspicious transactions; this includes cash receipts or international money transfers of C$10,000 or more. For January 2015, these reports will also have to be sent to the Canada Revenue Agency.
With the exclusion of agricultural land, non-residents are largely subject to the same fees and restrictions for property ownership as Canadians, those these vary by province. The industry does not collect official statistics on foreign real estate ownership, but property acquisitions are relatively common.
The countrys central bank, the Bank of Canada, regulates the financial markets in conjunction with an independent agency, the Office of the Superintendent of Financial Institutions (OSFI). The OSFI specifically regulates financial institutions including banks, insurance corporations and private pension funds.
The Bank of Canada sets monetary policy and monitors the value of the free-floating CAD. Neither the government nor the central bank set a particular target for the Canadian dollar, but the Bank reserves the right to intervene in the foreign exchange market to prevent rapid and potentially currency movements. Such measures are governed by the country intervention policy, which is jointly set by the government and central bank. The Bank last intervened in the foreign exchange market in 1998, after which the government has adopted a policy to act only in cases of emergency.
The Canadian Foreign Exchange Committee (CFEC), though not a regulatory authority, provides a platform to discuss foreign exchange issues and review market practices. It is chaired by the central banks financial market chief and includes representatives of major financial institutions active in the foreign exchange market, including the Big Five Canadian banks and international banks and exchange platforms.
Canadas diverse and high-tech industries, combined with a favourable policy toward skilled migration in key sectors, have led to high foreign exchange volumes. Some 500 money services businesses were registered with FinTRAC in 2013, including 184 new registrations that year.
The US dollar is the most frequently exchanged currency in Canada, given the strong flows of bilateral trade, tourism and migration between the two neighbours. The USD was involved in 46.2% of transactions in April 2014, followed by the CAD (32.8%) and the Euro (5.5%).
Individuals and corporations resident in Canada are subject to tax on their global income and capital gains. Non-residents are subject to Canadian corporate and personal income tax if they conduct business in Canada, are locally employed, or sell property located in the country. Reduced federal tax rates are in place to attract activity to under-served provinces or key economic sectors.
Corporations and individuals are subject to income tax at the provincial level, but most provinces have eased the historic capital tax on corporations. Today, Saskatchewan, Manitoba, Quebec, Newfoundland and Labrador, Prince Edward Island and New Brunswick apply limited capital taxes on certain financial institutions.
Non-residents are also subject to a 25% withholding tax on dividends, certain interest payments, rents and royalties received in Canada. However, these taxes apply strictly to income generated from Canadian activities and investments. Canada has signed tax treaties with over 90 countries to avoid redundancy and, in some cases, eliminate or reduce withholding tax.
The currency of Canada is the Canadian Dollar (CAD, symbol C$). Bank notes are available in C$5, C$10, C$20, C$50 and C$100 denominations. The C$1 and C$2 bills have been replaced with coins (the loonie and toonie, respectively). One Canadian dollar consists of 100 cents, available in 1, 5, 10 and 25 cent coins.
Review our Canada corridor guides below covering property, expats, moving abroad and business.
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