Financial Services

Case Study

Fact Pattern

• A Parent Co, a Korean company, has located A Bank Co in Vancouver.
• A Bank Co is a wholly owned subsidiary operating as A Parent Co’s North American regional office.
• A Bank Co is a Schedule II Bank in Canada under the Bank Act as administered by the Office of the Superintendent of Financial Institutions.
• A Bank Co is incorporated in Canada with a fixed place of business in British Columbia.
• A Bank Co carries on a number of activities including foreign exchange, letters of credit where only one party is situated in Canada, and providing financial advice to non-residents.
• A Bank Co also provides administrative and back-up information technology services to its affiliates outside Canada (A Sub Co).
  

Illustration

Analysis

• A Bank Co is eligible to apply for registration under the International Business Activity Act (IBAA) since it will be carrying on an “international business”, was incorporated in Canada and has a permanent establishment in British Columbia.
• A Bank Co will be required to become a member of the IFC BC Society in order to remain registered.
• The provision of financial advice to non-residents and letters of credit where one party to the transaction is a non-resident are qualifying international activities.
• Dealing in foreign exchange for a resident or a non-resident is a qualifying international activity.
• The provision of administrative services directly related to the financial activities of an affiliate is a qualifying international activity.
• The provision of services, equipment and premises as back-up for business continuance of US affiliates is a qualifying international activity.
• A Bank Co is carrying on a qualifying business through a fixed place of business in British Columbia.
• A Bank Co will be eligible to claim a refund of its provincial corporate income taxes paid in respect of its international business.

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