Fund Administration and Management

Case Study

Fact Pattern

• A Co is incorporated in Canada with a fixed place of business in British Columbia.
• A Co provides third party services to global asset managers resident in London, Hong Kong, and New York through its fixed place of business in British Columbia.
• A Co provides the following services to its global asset manager clients:
• Accounting for managed funds, including preparation of reports and annual reports.
• Preparing the annual tax information package for fund investors.
• Transacting trades of funds as directed by the global asset manager.
• Holding securities of funds as custodian.
• Accounting for investor deposits and withdrawals from funds.
• Computing the asset manager fees in accordance with fund terms and conditions.
• Managing cash flow balances and banking for funds.

Illustration

Analysis

• A 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 Co will be required to become a member of the IFC BC Society in order to remain registered.
• A Co is carrying on an active business of providing management and administrative services of investments for a non-resident, and, as such, is carrying on a qualifying business through a fixed place of business in British Columbia.
• A Co’s fund administration services business is an active business and there would not be any requirement to meet the “substantial presence” test of $300,000 of BC wages and $10M equity.
• A Co’s activities performed for non-resident persons of managing investments and providing administrative support services will qualify as international financial activities. Therefore, these activities will be considered to be an international business.
• A 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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