Canada looks through a partnership and grants treaty relief to partners resident in treaty countries, but will not reduce withholding on dividends below 15 percent. Some professionals or consultants may incorporate. Others may only incorporate the management of the practice, as in Tridont's attempt several years ago for Canadian medical and dental practices. US Apple Orthodontics, a public company, effectively purchased a 50 percent interest in orthodontic practices around North America. A Canadian-resident partner or Canadian partnership cannot roll assets to a Forco.
Tax is deferred until the exchange.
The proposed foreign investment entity rules do not apply if all of Forco's assets are used in an active business. If Forco renders services in Canada, it may suffer 15 percent withholding tax on fees paid by Canadians, but it can credit that amount against Canadian corporate income tax and branch tax. Maintaining an office wherever it carries on business may subject Forco to tax in each such jurisdiction, as well as where it maintains a head office.