Because the assessment of residency status can be challenging, please seek advice where necessary. However, generally speaking, an organization is a resident in the provinces in which it is obligated to pay provincial income taxes.
The residency of an organization is determined by whether it has a “permanent establishment” in one of the provinces where stewardship obligations have been regulated. A permanent establishment can include an office, a workshop, a factory, a warehouse or some other type of fixed place of business such as an employee’s home office.
Below is a table of examples of what may constitute a permanent establishment. If you have questions about your own unique situations, please feel free to contact National Steward Services. CSSA 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.
- When an organization or company has any of the following (owned, rented, and/or leased) in a province with stewardship obligations then it may have a permanent establishment in that province:
- Office (please see below for further clarification on what activities in an office constitute residency)
- Any type of fixed place of business such as a home office
- If an organization or company has individuals (i.e., employees or agents who are acting on the organization or company’s request) who can contract (i.e., authorized to sign) on the organization’s or company’s behalf in a province with stewardship obligations then it has residency in that province.
- When an organization or company owns land in a province with stewardship obligations then it has a permanent establishment.
- When an insurance company is licensed/registered to do business in a province then it has a permanent establishment in that province.
- When an organization or company conducts any physical activity in a province then it has a permanent establishment there. These activities include:
- Constructing anything in whole or in part
- If an organization uses substantial machinery or equipment (owned, rented, and/or leased) in a province then it is deemed to have a permanent establishment in that province.
- 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 that supply packaging and printed paper into that marketplace.
- For the Recycle BC and MMSW programs: If a franchisor that has its headquarters located outside of the respective provincem and has franchisees inside the province, the franchisor is obligated.
Below are examples of what does not constitute a permanent establishment and therefore constitutes ‘non-residency’.
- An organization or company only has a Post Office box in the province where stewardship obligations exist.
- An organization or company only does business through a commissioned agent (i.e., an individual who does not receive compensation from the company, other than commission).
- A parent company with no permanent establishment in a province is not made resident in that province because it has a wholly owned subsidiary in that province, unless it is a franchisor with franchisees in BC or Saskatchewan.
- When a company only has an office in place for the sole purpose of purchasing merchandise.
The following scenarios are designed to help further illustrate the criteria for determining residency in a province where your company may have stewardship obligations. As mentioned above, residency needs to be established separately in each province where regulations exist so an organization may be a steward in one province but not a steward in another province.
|Examples of Residency Scenarios||Company Responsible|
|A company in the United States secures warehousing and distribution services from Company X which is located in a province where stewardship obligations have been regulated. The US company ships merchandise from the US directly to Company X and Company X stores the merchandise in its warehouse—the merchandise continues to be owned by the US company and not Company X. Employees of Company X receive direction from the US company to fulfill the US company’s customer orders from its customers located in the province with the merchandise in Company X’s warehouse. The US conducts no additional business activities in the province.||The first importers, or customers of the US company, are the obligated stewards. The US company is not obligated because it does not have residency in the province with stewardship obligations. Company X is not the obligated steward because it does not take title to or control of the merchandise. The customers to which Company X ships or delivers the merchandise, or makes it available for pick up, are the obligated stewards.|
|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 (i.e., execute contracts and thus obligate the company).||The organization is obligated because it has residency in the province because it has 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 these employees work at the company’s office or at their home offices.|
|A company only has a commission agent in one of the regulated provinces. This commission agent receives no salary or compensation other than commission from the company.||The company would not be obligated as the use by a company of a commission agent(s) in a regulated province does not by itself create a permanent establishment or residency for the company in the province where the commission agent is located.|
|A company and brand owner is not located in and does not conduct business in the province other than to sell its brands of products to a distributor in the province. The distributor takes legal possession or ownership 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.|