Canada: Country and Foreign Investment

Canada History, Population, Language and Culture

The earliest settlors in Canada were prehistoric hunters who travelled to the region in around 40,000 to 30,000 BC from Asia by crossing the Bering Strait before it was covered by meltwater at the end of the Ice Age. These people formed the various Indian tribes that settled throughout the region.

French colonies established their first settlements in the 17th century. The country was later receded to the United Kingdom in 1763. Canada was established as a self-governing state in 1867 but retained its ties to the British Crown.

The country’s constitution of March 29, 1867, created a federation of four provinces, which were later divided into 10 provinces (Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec and Saskatchewan) and three territories (the Northwest Territories, Nunavut and Yukon Territory). On April 17, 1982, a new constitution was approved solidifying the territory’s autonomy from the UK.

As at November 16, 2009, the population of Canada was 33.8 million. In a 2006 Census, after Canadian or Canadian with mixed origins (10 million), other most frequently reported origins in descending order, either alone or with other origins, were English, French, Scottish, Irish, German, Italian, Chinese, North American, Indian and Ukrainian.

The 2006 Census estimated the “visible minority” population at just over 5 million (16.2% of the population), and included Blacks (2.5%), South Asians (4%), Chinese (3.9%), and Latin Americans, Arabs, Southeast Asians, West Asians, Koreans and Japanese (together, 5.1%). Two-thirds of visible minority individuals had arrived in Canada as immigrants since 2001.

Owing to its strong economic links to the US, and temperate conditions in the south, 90% of the population is concentrated within 160 km of its southern boundary with the US. Further north, the country is less populated due to the Arctic climate.

English (the predominant language) and French are the official languages of Canada. The main religions are Roman Catholic (42.6% of the population), Protestant (23.3%, including United Church at 9.5%, Anglican at 6.8%, Baptist at 2.4%, and Lutheran at 2%), other Christian (4.4%), and Muslim (1.9%).

BACK TO TOP

Canada Government

Canada is a parliamentary democracy, a federation, and a commonwealth realm. The head of state is the British monarch, Queen Elizabeth II, who is represented in her absence by the Governor General. The country’s parliament consists of the Senate, which has 105 seats (with members appointed by the Governor General under the advice of the serving Prime Minister), and the House of Commons, which has 308 seats, members of which are elected by popular vote to serve a maximum of five years. The most recent elections in the House of Commons were on October 14, 2008. The next will be held no later than October 19, 2012.

The leader of the majority party in the House of Commons is automatically designated as the country’s Prime Minister, who then has authority over Federal Ministry appointments. The current Prime Minister is Stephen Harper after his party, the Conservatives, won a 37.6% majority. He has been serving as Prime Minister since February 2006.

The legal system is based on civil law. The court system consists of the Supreme Court of Canada, the Federal Court of Canada, the Federal Court of Appeal, and individual Provincial Courts.

BACK TO TOP

Canada Economy and Currency

Canada’s economic and technological development has been spurred by its close trade ties with the United States, which purchases around 80% of Canada’s exports.

Benefiting from rich natural resources, Canada was able to develop on par with the United States, moving swiftly from a primary (agriculture-based) economy to an affluent services-based economy, with a strong industrial sector.

Most crucial to Canada’s development was the ratification of the 1989 US-Canada Free Trade Agreement, which removed tax barriers to bilateral trade, and aided in the two countries’ economic integration. A later agreement, the 1994 North American Free Trade Agreement (NAFTA), brought about trilateral co-operation on the continent, bringing Mexico into its scope. Canada continues to run a large export surplus with the United States as the latter’s largest supplier of energy, including oil, gas, electricity and uranium.

In 2006, services accounted for 76% of the Canadian economy, with manufacturing accounting for 13%, construction 6%, and agriculture just 2% of gross domestic product (GDP).

As with many major economic players, the economic crisis has affected Canada’s growth, causing a sharp slowdown in 2008 as a result of the US housing slump, lacklustre auto sector demand, and the deterioration of world commodity prices. Canada’s GDP increased just 0.4% year-on-year, from USD1.298 trillion in 2007 to USD1.303 trillion in 2008 and and was down by 2.5% to USD1.279 trillion in 2009. Unemployment was 8.3% in 2009. Over the period, GDP per head shrank from USD39,400 (in 2007) to USD39,200 (in 2008) and USD38,200 (in 2009).

Following years of balanced budgets, public finances deteriorated in 2009 and a budget deficit of more than USD44.7bn was recorded for the first time in a decade.

The currency is the Canadian dollar (CAD), and despite being pegged to the US dollar (USD) in the past, is not currently pegged to any currency. In 2009, CAD1 = USD1.154 up from 2008, CAD1 = USD1.036, down from USD1.072 in 2007, USD1.133 in 2006, USD1.211 in 2005, and USD1.301 in 2004.

BACK TO TOP

Canada Entry and Residence

An individual wishing immigrate to Canada on a permanent basis must apply for a Canada Immigration (Permanent Resident) Visa, which allows a person to live and work anywhere in Canada.

Those that are successful will receive a Permanent Resident Card. Canadian permanent residents must meet certain residency obligations or they may lose their permanent resident status. Two years of "residency days" must be accumulated in every five-year period. Residency days need not be consecutive and may be accumulated either by the person’s physical presence in Canada or, if the person is outside of Canada, in the following ways:

Permanent residents and their dependants have the right to receive most social benefits, including health care coverage, and can apply for Canadian citizenship after three years of being a permanent resident.

Those wishing to stay in Canada on a temporary basis (e.g. for leisure, to visit friends or family, or for business) may need to obtain a Temporary Resident Visa or visitor visa before doing so. Citizens of certain countries, such as the United States and Great Britain, are generally exempt from this requirement. Visitor visas are usually valid for six months, but can be extended. A visitor visa may be issued as either a single-entry or multiple-entry visa.

Individuals relocating to Canada for work purposes are generally required to obtain a work permit. The individual will require a written job offer letter from a Canadian employer. The employer must then have the offer of employment validated by the department of Human Resources and Skills Development Canada before a visa is issued by Citizenship and Immigration Canada. Permits are also available for those wanting to relocate to Canada to study.

For tax purposes, residency applies to anyone whose permanent place of residence or whose centre of personal and economic interests is in Canada, or who spends more than 183 days in the country during a fiscal year.

BACK TO TOP

Canada Business Environment

Telecommunications services are described as excellent and modern. Submarine cables provide links to the US and Europe. In 2009 there were more than 23 million mobile phones, and more than 25 million Internet users.

Canada has a well-developed aviation industry, offering international flights worldwide. There are 26 major airports as part of the national airports system, 726 certified airports that support scheduled and non-scheduled flights, and 1,700 aerodromes that support takeoffs and landings. Air Canada, now privately owned, is the country’s largest airline, followed by WestJet.

Canada lays claim to one of the largest railtrack networks in the world, with 48,000 km of track. State-owned VIA Rail is the main operator.

There are many ports and terminals operating in Canada, including Fraser River Port, Halifax, Hamilton, Montreal, Port-Cartier, Quebec City, Saint John (New Brunswick), Sept-Isles and Vancouver.

The housing market, which grew steadily in recent boom years, has been hit, albeit to a lesser degree than elsewhere, by the economic crisis. The market grew by just 0.1% in April 2009 on April 2008. Rental prices for apartments in Canada’s 35 major centres increased by 2.9% over the same period. A significant rise in the housing market and subsequent fears of a significant downturn to follow led the government to introduce measures to protect the market. The measures include a cap in re-financing to 90% from 95%.

The Canadian banking sector is well developed. As at February 2010, there are 22 domestic banks, 25 subsidiaries of foreign banks, and 23 foreign banks with branches in Canada. Two banks are government-owned: the National Bank of Canada and the Business Development Bank of Canada.

BACK TO TOP

Canada Investment Incentives

Canada offers an investment tax credit (ITC), which allows a sole trader or a partner to subtract, from taxes owed, part of the cost of some types of property acquired or expenditures incurred. Unused ITCs can be carried forward.

The Apprenticeship Job Creation Tax Credit (AJCTC) is a non-refundable investment tax credit equal to 10% of the salaries and wages payable to certain apprentices. In order to qualify for this tax credit, the apprentice must be working in a prescribed trade in the first two years of his or her apprenticeship contract, and the contract must be registered under a federal or provincial/territorial apprenticeship programme. Employers can claim a maximum of CAD2,000 per year for each eligible apprentice. AJCTC can be added to the ITC in order to reduce federal taxes payable for the tax year. Unused credits can be carried back over three years or carried forward over 20 years.

Lastly, the Canadian Film or Video Production Tax Credit programme offers a refundable tax credit of 25% of labour expenses incurred by a qualifying corporation, whether or not tax resident in Canada, for the production of a Canadian film or video. Such labour expenses cannot exceed 60% of production costs, net of any assistance. The maximum credit available is therefore limited to 15% of production cost net of assistance.

BACK TO TOP