This post breaks down the benefits of CCPC status, highlighting the types of companies for which they are most meaningful. Finally, it explains how CCPC status may be maintained even where non-resident Canadians own a majority of the company’s voting shares. 

Note: The following is not an should not be construed as legal advice.

Key CCPC Benefits: An Aliyah-Informed Overview

A CCPC is a private Canadian corporation not controlled by non-residents (or public corporations). CCPC status unlocks several tax benefits, most significantly:

The Small Business Deduction (“SBD”)

CCPCs benefit from the SBD which applies a reduced corporate tax rate – 9% federal tax versus the 15% standard rate – to the first $500k of the CCPC’s active business income.

This may improve the business’s after-tax cash flow materially, if profits are retained and/or reinvested in Canada.

Note For Olim

It is important to note that if corporate profits are ultimately distributed as dividends to an individual non-resident of Canada, the Canadian withholding tax (typically 15% under the Canada–Israel tax treaty) will be applied to them.

This means that if the business regularly distributes profits to shareholders who are Israeli residents, the SBD’s value diminishes, and CCPC status may be less central to the after-tax result.

Where profits remain inside the corporation, however, the SBD remains highly a valuable tool.

Scientific Research and Experimental Development (“SR&ED“) Credits

Subject to certain limitations, CCPCs may access tax credits at a rate of 35% (versus 15% for Canadian companies that are non-CCPCs) on certain qualifying research and development activities, up to an annual limit. These credits are refundable, meaning the business can receive the credit as cash back if it does not have enough Canadian tax payable to use the credit in the relevant year. 

For technology, life sciences, and other innovation-driven companies, maintaining CCPC status can therefore be critical.

Lifetime Capital Gains Exemption (“LCGE”)

Available exclusively on shares of qualifying CCPCs, the LCGE may be used to shelter a substantial portion of Canadian capital gains tax upon the sale of the CCPC shares. As of 2025, the LCGE permitted sheltering up to $1,016,836 in capital gains on disposition by an individual (indexed to inflation). 

This is highly relevant for companies aiming for an exit, but potentially less so for lifestyle businesses with dividends regularly paid out to non-resident Canadians. 

Note for Olim 

For Canadian business owners planning to become Israeli tax residents, Canada may not be the primary tax jurisdiction upon exit of the company, and the LCGE will not be preserved by the Israeli tax authority. 

Per the Canada–Israel tax treaty, only taxes paid to Canada are credited against Israeli tax. So if the LCGE reduces Canadian tax to zero, there will be nothing for the Israeli tax authority to credit, and the oleh will remain subject to Israeli taxes on their worldwide capital gains.

Conversely, while the LCGE may not be particularly relevant in these cases, the 10-year capital gains tax exemption for new immigrants, could be quite significant. This benefit shields the gains on Canadian shares from Israeli taxes provided the gains are realized within the first 10 years of Aliyah. 

The 10-year exemption could eliminate taxes on the same capital gain, depending on where the seller is resident when the sale occurs.

A Canadian corporation may, notably, remain a CCPC even if key founders or directors make Aliyah.

In The Queen v. Bioartificial Gel Technologies (Bagtech) Inc., the Federal Court of Appeal confirmed that despite non-residents controlling the majority of a company’s voting shares, per the de jure control rules, the provisions of a Unanimous Shareholders Agreement (“USA”) restricting the ability of the non-residents to elect a majority of the board of directors, the company could remain a CCPC. 

While a USA is, notably, insufficient in isolation to maintain a company’s CCPC status, it is a key piece of the broader CRA analysis concerning whether a company is Canadian-controlled. Whether CCPC status can be preserved post-relocation and depends on a combination of factors, which will be explored further in Part 2.