International Activities

Qualifying activities are international in nature—one side of the transaction must be conducted with, for, or on behalf of a non-resident to be eligible for the tax incentive program.

• By establishing an international business (IB) in British Columbia, a company can receive a full refund of the British Columbia taxes paid on the net income of the qualifying business (75% refund for patent income). 
• Companies can register a business or part of a business in the International Business (IB) program. For income to qualify for the refund, one side of the transaction must be with a non-resident.
• The International Business Activity Act (IBAA), legislated by the Province of British Columbia in 2004, provides the legislative framework for the IB program.

Activities added in 2010

• Digital media distribution
• Certification and trading of carbon credits
• Clean technology

Financial Activities

• Accepting or making deposits in any currency to or from a non-resident
• Making loans in any currency to or from a non-resident (arm's length only)
• Guaranteeing payment of a debt, if all debtors or creditors are non-residents
• Using a non-resident broker, such as an investment banking affiliate, to underwrite Canadian issues to be sold to non-residents or non-resident issues to be sold to Canadians or non-Canadians
• Foreign exchange dealing for, or on behalf of a resident or a non-resident (only financial institutions and companies with a primary business in foreign exchange qualify)
• Managing foreign exchange activities for non-residents
• Issuing and accepting letters of credit or handling documentary collections in respect of a transaction where not more than one party is resident in Canada (only financial institutions qualify)
• Trustee of a non-resident trust, guardian of a non-resident minor, or executor of an estate of non-residents (only financial institutions qualify)
• Dealing in securities with a non-resident person or broker (only registered securities dealers and financial institutions qualify)
• Dealing in securities as agent for a resident for securities not listed on a Canadian exchange (only registered securities dealers and financial institutions qualify)
• Dealing in short-term securities with a non-resident person or broker

Financial Management and Investment

• Managing, for a fee or commission, investments for non-resident persons
• Providing, to a non-resident person, prescribed investment services (effective September 1, 2010).
• Providing financial advice to a non-resident, either an affiliate or a client (this excludes legal, accounting or tax advice provided by a corporation in the business of providing that advice)
• Preparing financial research for a non-resident, either an affiliate or a customer (this excludes legal, accounting or tax research provided by a corporation in the business of providing that research)
• Acting as principal in trading short-term debt securities (other than derivatives) with a non-resident person or broker
• Managing a portfolio for a Canadian affiliate that consists of investments in securities issued by a non-resident and not listed on a Canadian exchange
• Managing a portfolio consisting of foreign or Canadian investments for a non-resident affiliate
• Leasing property to a non-resident by means of a direct finance lease
• Insuring or reinsuring risks (other than life, sickness, or accident) related to non-residents and property or events outside Canada including captive insurance arrangements

Administration

• Administrative support services directly related to a financial activity of a non-resident
• Back-up office services, equipment and premises to a non-resident to continue business operations in the event primary equipment or premises become temporarily unusable

Accounts Receivable

• Factoring accounts receivable from a non-resident and purchased without recourse 
• Collecting trade accounts receivable from non-residents for a non-resident affiliate or customer

Patents

• Life science and green-related patents—those related to power generation using forces of nature such as wind, solar and tidal. In 2009, fuel cell technology and wastewater treatment were added as eligible patents.  
• Activities related to these patents:
• Selling, assigning, or licensing a prescribed patent to a non-resident
• Selling a good or service to a non-resident where the revenue is based on an invention for which a prescribed patent is owned by the corporation
• In 2010, the IBAA was amended to clarify that international business income includes all income related to the licensing of a qualifying patent.

Film Distribution

• Distributing film and television rights outside Canada, including ancillary rights

Tax Incentive for Employees: IB Specialists

A registered corporation can apply to register employees earning over $100,000 annually an IB Specialist. An IB Specialist qualifies for a refund of Provincial personal income tax at the rate of 100% for years 1 and 2, 75% for year 3, 50% for year 4, and 25% for year 5. The Executive Specialist is a member of senior management earning over $250,000 annually. For more information on the tax incentive for employees, click here.

Registering a Business

Further details on the IB program can be found in Bulletin IFA 001, International Financial Activity Overview. Details on Life Sciences can be found in Bulletin IFA 002, Life Science Patents.

The tax incentive program is administered by the BC Ministry of Finance. For more information regarding the legislation or provincial registration, please visit their website. The information on this website is provided for convenience and guidance only and is not a replacement for the legislation. Businesses considering accessing the benefits under the IBAA should consult with their professional advisors on the applicability of the legislation to their particular circumstance.

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