Each province has specific guidelines for determining residency; however, for stewardship purposes, typically (although not fully determinative) an organization is considered resident in any province in which it is required to pay provincial income taxes.
Determining residency can be complex, and you may need to seek advice to confirm your standing in one or more of the provinces.
Some common examples are provided below to help guide you in determining your organization’s residency status.
If you have questions with respect to the determination of residency, contact Customer Relations at 1 (888) 980-9549.
Circular Materials is pleased to assist companies in determining their residency status; however, it is ultimately a steward’s responsibility to understand their stewardship obligations in each province.
Below are examples of what does not constitute a permanent establishment and therefore constitutes ‘non-residency’.
Assuming that the organization does not satisfy one of the other residency criteria:
The following scenarios are designed to help further illustrate the criteria for determining residency. As mentioned above, residency needs to be established separately in each province where stewardship regulations exist . An organization may be a steward in one province but not in another.
|Examples of Residency Scenarios||Resident Company|
|An organization has employees who are resident in one or more of the regulated provinces. These employees receive commissions and salaries from the company and have general authority to contract on the company’s behalf (e.g., execute sales contracts on behalf of the company and thus obligate the company).||The organization is obligated because it has residency in the province through salaried employees who are resident in the province and possess the authority to execute contracts on behalf of the organization. This company has residency regardless of whether employees work at the company’s office or at their home offices.
If the employees were commission agents of the organization, without the ability to enter into contracts on behalf of the organization, that alone would not satisfy the residency requirement and it would be the first importer of the merchandise who would be the obligated party.
|A company that is a brand owner is not located in and does not conduct business in the province where stewardship regulations apply either directly or through an affiliated company or a licensee of the brand. Instead, it sells its products to a distributor in the province. The distributor takes legal possession or control of the merchandise and sells it to its customers in the province and elsewhere.||The distributor would be obligated for the company’s brands in the province as the company/brand owner itself does not have a permanent establishment in the province where the distributor is located since it does not own, rent or lease the warehouse or conduct other activities that would make it resident in the province.|
|An out-of-province brand owner leases space in a third-party warehouse located in a province with stewardship obligations. The brand owner has no affiliates or parent organizations in the province but hires the third party to fulfill the distribution of its product.||The brand owner would have residency in the province where it leases the warehouse and would therefore be an obligated steward in the province.|
Apparel X Ltd. is a clothing company located in the United States for Brand X Apparel.
Apparel Y Ltd, is an Ontario clothing retailer and Ontario resident brand owner for Brand X Apparel. Apparel X Ltd. is the parent company for Apparel Y Ltd.
Brand X merchandise is supplied to Ontario consumers through two channels:
Who is responsible to report the e-commerce sales in Ontario for Brand X supplied by Apparel X Ltd. in the US?
As the Ontario resident brand owner for Brand X, Apparel Y Ltd. is responsible for all Brand X PPP supplied to Ontario consumers, including:
|A Canadian wholesaler located in BC ships to various Manitoba retailers. The wholesaler has a resident parent company located in Manitoba. Once the merchandise is shipped it is distributed to consumers through the resident Manitoba retailers.||If a parent company has a permanent establishment in a province with stewardship obligations then it is obligated for all its subsidiaries, including those subsidiaries that do not have a permanent establishment, but supply packaging and printed paper into that marketplace. In this scenario, the Manitoba parent company of the BC based wholesaler would be obligated for the PPP supplied to Manitoba retailers by the BC wholesaler.|
|Company Y is resident in both BC and Ontario and is the parent company to Company X which is located in the United States. Both company Y and company X supply PPP into Ontario and BC.||
Because Company Y is the parent of company X they are affiliated companies and must file a single report. Because company Y is resident in BC and Ontario both companies are deemed to have residency in those provinces and must report all PPP supplied by both company Y and company X to consumers in those provinces - even if Company X sales are exclusively online sales shipped from the United States.
Similarly, if company Y is a licensee of company X's brand, it qualifies as the obligated brand owner in the provinces for all the material supplied in the province (including that which is shipped from outside the province into the province), regardless of whether there is a parent-subsidiary relationship between company Y and company X.