Two paths to incorporating in Ontario. Here is how the federal CBCA and provincial OBCA compare on name protection, cost, compliance, and flexibility — and which one is right for your business.
By Jonathan Kleiman, Barrister & Solicitor · Published May 2026
When you decide to incorporate a business in Ontario, you have two options: incorporate federally under the Canada Business Corporations Act (CBCA), or incorporate provincially under the Ontario Business Corporations Act (OBCA).
Both create a valid Ontario corporation. Both give you limited liability, a separate legal entity, and access to the small business tax rate. The differences are in name protection, compliance requirements, and how easily you can operate outside Ontario.
A federal incorporation provides Canada-wide name protection. No other federal corporation can be incorporated with a confusingly similar name anywhere in Canada.
A provincial incorporation protects your corporate name only within Ontario. A business in British Columbia or Alberta could incorporate under an identical or similar name without any conflict.
If your brand is important and you plan to operate nationally, federal name protection is a meaningful advantage. For a purely local business, provincial protection is usually sufficient.
A federal corporation has the right to carry on business in any province in Canada. You still need to register as an extra-provincial corporation in each province where you operate, but the process is straightforward — it is a registration, not a second incorporation.
An Ontario corporation that wants to do business in another province must also register as an extra-provincial corporation there. The practical difference is minimal in most cases, but federal incorporation is generally considered the smoother path for multi-province operations.
Federal incorporation costs approximately $200 when filed online through Corporations Canada. Ontario provincial incorporation costs approximately $300 through the Ontario Business Registry.
Federal is actually the cheaper filing. However, a federal corporation doing business in Ontario must also register with the province (an additional filing), which can add to the total cost. Legal fees for either type of incorporation are generally comparable.
Federal corporations must obtain a NUANS name search report before filing articles of incorporation. Both federal and Ontario corporations must file annual returns, maintain a corporate minute book, and keep their registered office and director information current.
Ontario corporations do not require a NUANS report for numbered companies, though one is needed for named companies. Annual compliance obligations are similar under both statutes — annual return filings, up-to-date corporate records, and proper director and officer documentation.
The CBCA requires that at least 25% of directors be Canadian residents. If the corporation has fewer than four directors, at least one must be a Canadian resident.
Ontario eliminated its director residency requirement in October 2021. An Ontario corporation can now have directors who are all non-residents of Canada.
This is a significant factor for businesses with foreign ownership or international founders. If your directors are not Canadian residents, provincial incorporation avoids the residency constraint entirely.
Federal corporations are governed by the Canada Business Corporations Act (CBCA). Provincial corporations are governed by the Ontario Business Corporations Act (OBCA). The two statutes are similar in structure but differ in specific provisions regarding shareholder remedies, director duties, and corporate governance procedures.
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Federal incorporation is the better choice when:
Ontario incorporation is often the better choice when:
Whether you incorporate federally or provincially, your corporation is taxed the same way. The CRA and the Ontario Ministry of Finance do not distinguish between a CBCA corporation and an OBCA corporation for tax purposes. The corporate tax rate depends on the type of income and the corporation's status as a Canadian-controlled private corporation (CCPC), not the jurisdiction of incorporation.
This is one of the most common misconceptions. The decision is about name protection, compliance, and operational flexibility — not about taxes.
Yes, through a legal process called continuance. A corporation incorporated under the OBCA can apply to be continued under the CBCA (or vice versa). The original incorporation is surrendered, and the corporation continues as though it had always been incorporated under the new statute.
Continuance requires shareholder approval, government filings, and careful coordination. A business lawyer should manage this process to ensure all steps are completed correctly and no corporate history is lost.
For most Toronto small businesses, provincial incorporation is the simpler and more cost-effective choice. Federal incorporation becomes worthwhile when you need national name protection or plan to operate across Canada.
Federal incorporation under the CBCA creates a corporation that can operate across Canada with national name protection. Ontario incorporation under the OBCA creates a corporation that operates primarily in Ontario with provincial name protection. Both produce valid Canadian corporations taxed the same way.
Federal is actually slightly cheaper — approximately $200 online vs $300 for Ontario. However, federal corporations may face additional costs registering as extra-provincial corporations in other provinces where they do business.
No. Both federal and Ontario corporations are taxed the same way by the CRA and the Ontario Ministry of Finance. The tax rate depends on the type of income and the corporation's status, not the jurisdiction of incorporation.
Yes, through a process called continuance. The corporation applies to be continued under the federal CBCA, and the Ontario incorporation is surrendered. A lawyer should manage this process to ensure proper shareholder approval and government filings.
For most Toronto small businesses operating only in Ontario, provincial incorporation is simpler and sufficient. If you plan to operate nationally or want Canada-wide name protection, federal incorporation may be worth the additional complexity. A first step is deciding whether to incorporate at all.
Not sure whether to incorporate federally or provincially? Jonathan Kleiman handles both Ontario and federal incorporations on a flat-fee basis and can advise you on which option makes sense for your business.
Call 416-554-1639 or book a free consultation.
Jonathan Kleiman handles Ontario and federal incorporations on a flat-fee basis. Free 30-minute consultation to determine which is right for your business.