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Frequently Asked Questions
Questions:
What is the International Business Activity (IBA) program? |
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The IBA program provides eligible corporations and specialists who work for those corporations a refund of the British Columbia income tax paid on income related to the corporation's international business carried on in British Columbia. Please see About IBA Program . |
What is an international business? |
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International business is the umbrella term that applies to all types of businesses that are eligible under the IBA program. For more information, please see About International Businesses |
Who can claim the tax refund? |
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Under the International Business Activity Act (the Act), registered corporations and registered IB specialists are eligible to claim a refund. An eligible corporation must register itself, and any specialists it employs, under the Act to qualify for the program.
Please see How to Register. |
How do I register a corporation? |
How does a corporation qualify for registration? |
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A corporation will qualify under the IBA program if it:
- was incorporated in Canada and its incorporation has not since been continued (transferred or emigrated) outside of Canada
- has a permanent establishment in British Columbia
- is not exempt from income tax under the Income Tax Act (British Columbia)
- pays an application and registration fee of $5,000
- establishes and carries on an international business within 90 days of registration
- establishes and maintains membership in the International Financial Centre British Columbia within 90 days of registration
Please see About International business and How to Register. |
What information should a business plan include? |
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As part of the supporting documentation for the Application for Registration of a Corporation (FIN 574), you must submit a business plan that describes how your corporation intends to conduct its international business (IB).
For a new business, your business plan should include the following financial documentation, if available: projected IB income statements, projected IB balance sheets, and IB cash flow projections.
For an existing business, you may provide actual financial statements from the most recent period for which you have financial statements and income tax returns, unless your IB plans to change its operations materially (if this is the case, please provide projected statements).
The corporation should also provide “other information” that explains the nature of the existing or proposed international business and how the business will be conducted.
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What should the “other information" include? |
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The business plan is the key information that will help us to understand your international business (IB) as a whole and correctly determine your eligibility for the IBA program. In general, you need to tell us what your business entails, how it will perform the IB activities/transactions indicated and, if appropriate, how your accounting systems will allow you to distinguish qualifying activities from non-qualifying activities.
For an existing business, the information could include such of the following that is applicable:
- an explanation of the day to day operation of the business
- types of activities/transactions – how they are carried out and by whom
- volume of transactions
- the number and types of employees who will be active in the business, including plans for future expansion, if any
- where business is transferred from another jurisdiction, a timeline for the transfer
Where the IB is a new business, similar information should be included as well as a marketing plan.
If the IB is not the only business carried on by the corporation, the approximate percentage that your IB is, or is projected to be, of your overall business.
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Why is registration necessary? |
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The IBA program is a refund program. The more information that you provide about your business and your operations, the better we will be able to provide you with informed feedback on your registration under the IBA program.
As registration is only one of the eligibility requirements for obtaining a refund under the IBA program, the Ministry of Finance should be informed of any changes that may modify, expand or restructure your international business to ensure that you continue to be eligible for the IBA program in the future.
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What is the earliest date a corporation can be registered? |
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The earliest date a corporation can be registered under the International Business Activity Act is the date the corporation applies for registration.
Please see How to Register for further information.
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Is a corporation required to re-register following amalgamation? |
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Where two or more corporations amalgamate and at least one of the corporations was registered* under the IBA program, the newly formed corporation must re-register within
90 days of the date of the amalgamation or within a later period, as approved by the Ministry of Finance.
Generally, the effective date of the registration will be the date of amalgamation.
Please see How to Register for further information.
*If two or more registrants amalgamate, the newly formed corporation is automatically registered upon proper notice of the amalgamation (see above). |
What is the International Financial Centre British Columbia (IFC BC)? |
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The IFC BC is a non-profit society, established in 1986, that promotes British Columbia as a location for investment and encourages corporations to take advantage of the favourable tax treatment available under the International Business Activity Act.
A corporation registering under the IBA program must establish and maintain membership in the IFC BC within 90 days of the date of registration.
For more information regarding the IFC BC, please visit their website (opens in new window). |
How does a corporation maintain its registration under the IBA program? |
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In addition to continuing to meet the requirements necessary for registration, a corporation must also:
- continue to carry on an international business
- continue to maintain membership in the IFC BC
- continue to maintain a permanent establishment in British Columbia
- keep its books and records in British Columbia
Failure to meet these requirements could result in suspension or cancellation of the corporation’s registration and any specialists that it employs.
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Who qualifies as an IB specialist?
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An IB specialist is an employee of a registered corporation.
Please see How to Register an IB Specialist for more information about the eligibility rules and how a corporation may register an IB specialist. |
Does the specialist need to be a non-resident? |
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No, but the specialist must be a non-resident at the time of entering into the contract of employment with the corporation, or have been previously registered as an IB specialist.
Please see How to Register an IB Specialist for more specific information about the eligibility rules.
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Is there a fee to register an IB specialist? |
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No, there is no fee for an individual specialist. The corporation pays a fee to register the corporation. |
How long can someone be registered as an IB specialist? |
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An employee can be an IB specialist for a maximum of five years from the date of registration. During this five-year period, an IB specialist may switch employment between registered corporations. |
How is the amount of the refund calculated? |
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Registered corporations can claim a refund of up to 100% of British Columbia corporate income tax paid on income earned from eligible international businesses, other than an international patent business. Please see How to File.
For income earned from an international patent business, registered corporations can claim a refund of up to 75% of British Columbia corporate income tax paid, up to a maximum refund of $8 million per year. Please see How to File – Patents.
IB specialists can claim a refund of British Columbia income tax paid on net employment income earned from eligible international businesses. The rate of refund is 100% in the first two years of eligibility, 75% in the third year, 50% in the fourth year and 25% in the fifth year. Please see How to File – Specialists.
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Where can I get IBA program forms? |
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Please go to the Forms section of our website. You can enter data directly into the Adobe PDF documents from your computer, then print, sign and submit the completed form to the address on the form. |
What are the time limits on filing a claim?
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To obtain a tax refund, a registered corporation or IB specialist must file a return with the Ministry of Finance within 18 months of the end of their taxation year. The return will be considered complete only if all questions on the return are answered and all applicable supporting documentation is provided. |
Can a refund be obtained if no British Columbia income taxes are payable? |
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No. The tax refund is based on British Columbia income tax paid (after deducting all refundable and non-refundable tax credits). |
Must British Columbia income taxes be paid prior to receiving the refund? |
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Yes, prior to receiving the refund, proof must be provided that both federal and provincial income taxes relating to the taxation year have been paid in full. |
What happens if the Canada Revenue Agency makes changes that affect the corporation’s or IB specialist’s tax refund calculation? |
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If a Notice of Assessment or Reassessment issued by the Canada Revenue Agency under the Income Tax Act (Canada) or the Income Tax Act (British Columbia) changes an amount relevant to calculating your tax refund for the taxation year, a Registered Corporation or IB specialist MUST NOTIFY THE MINISTRY OF FINANCE WITHIN 90 DAYS AFTER THE ISSUANCE OF THE NOTICE by filing an amended Return (see Forms).
If the Ministry of Finance is not notified as required, and the assessment or reassessment results in an increased refund, you may be liable for a penalty of up to $2,500.
If the assessment or reassessment results in a decreased refund, you may be liable for a penalty equal to 25% of the difference.
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Is an IBA refund obtained by a corporation considered government assistance under the Income Tax Act? |
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The Canada Revenue Agency has ruled that a refund received by a corporation under the IBA program is included in income under Section 12(1)(x) of the Income Tax Act (Canada), unless the corporation makes an election under Section 12 (2.2) of that Act. |
Is an IBA refund obtained by a specialist considered a benefit of employment under the Income Tax Act? |
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The Canada Revenue Agency has ruled that a refund received by an IB specialist under the IBA program is not received by virtue of the individual's employment and does not have to be included in the individual's income under the Income Tax Act. |
How can I get a ruling or technical interpretation regarding the International Business Activity Act? |
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To request a technical interpretation or advance ruling, free of charge, write to:
Director, Income Tax Advisory and Intergovernmental Relations
Income Taxation Branch
Ministry of Finance
PO BOX 9444 STN PROV GOVT
VICTORIA BC V8W 9W8
Fax: 250-356-9243
All written requests will receive a prompt acknowledgement and a contact who can provide updates on the progress of the ruling or interpretation.
For general questions concerning rulings and technical interpretations, please call 250-387-5754. |
How can I obtain copies of rulings and technical interpretations? |
How can I get general information on the IBA program? |
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If you have further questions after reviewing the information available on our website, please call 250-953-3082.
Please note that government offices may be contacted toll-free from anywhere in the province by calling 1-800-663-7867, or by calling 604-660-2421 in the Greater Vancouver area, and requesting your call be transferred to the person or office you wish to contact. |
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