Factoring

Case Study

Fact Pattern

• A Parent Co sells its receivables to A Co (BC IFC Co) on a non-recourse basis.
• A Co registers under the International Business Activity Act (IBAA).
• A Co carries on the business of collecting A Parent Co’s receivables. The income earned on collecting receivables from non-residents is eligible for a provincial tax refund.

Illustration

Analysis

• A Co is eligible to apply for registration since it will be carrying on an “international business".
• A Co will be required to become a member of the International Financial Centre British Columbia (IFC BC) Society in order to remain registered.
• A Co's business activities qualify as an international business because it is collecting trade accounts from non-resident persons which have been acquired on a non-recourse basis.

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