Each province has specific guidelines for determining residency, however, for stewardship purposes, typically an organization is considered resident in any province in which it is required to pay provincial income taxes. The organization must also have a “permanent establishment” in one of the provinces where stewardship obligations have been regulated. Determining residency can be complex, and you may need to seek advice to confirm your standing in one of more of the provinces. However, we have provided some common examples below to help guide you in determining your organization’s residency status. If you have questions with respect to the determination of residency, you can also contact National Steward Services at 1-888-980-9549.
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 PPP into that marketplace.
- If a franchisor that has its headquarters located outside of the respective province and has franchisees inside the province, the franchisor is deemed to have residency and is therefore obligated.
Below are examples of what does not constitute a permanent establishment and therefore constitutes ‘non-residency’.
Examples of “Non-residency”
Assuming that the organization does not satisfy one of the other residency criteria:
- 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 salaried compensation from the company, other than commission).
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|
|A company in the United States secures warehousing and distribution services from Company X located in a province where stewardship obligations apply. The US company ships merchandise from the US directly to Company X. Company X stores the merchandise in its warehouse— the merchandise continues to be owned by the US company, not Company X. Employees of Company X receive direction from the US company to fulfill the US company’s customer orders, which are customers located in the same province as Company X’s warehouse.||The US company is not obligated because it does not have residency in the province with stewardship obligations. Because company X is fulfilling orders on behalf of the US company, it is deemed to have residency in the province with stewardship obligations. By fulfilling these orders, company X takes possession of the goods. Therefore by having residency in a regulated province, and taking possession of these goods, company X is the first importer of the goods and is the obligated party.|
|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 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 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. They sell their 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.|
|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:
• all PPP from Brand X sold in its Ontario stores; and
• all e-commerce sales shipped to Ontario customers by Apparel X Ltd. from the United States.
|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.|