What is an authorized foreign branch?
An authorized foreign branch is one which has been permitted by the Federal Minister, in accordance with the Bank Act. The aggregate paid up capital of an authorized foreign branch is based on the branch’s total risk weighted assets, capital deductions, and subordinated indebtedness. An authorized foreign branch is allowed to deduct the investment allowance if, in the course of carrying on its Canadian banking business, it owns shares in another financial corporation having the same year-end date as that of the authorized foreign branch. Authorized foreign branches are taxable under the Corporation Capital Tax Act if the branch has a permanent establishment in British Columbia and if the net paid up capital is equal to or greater than the threshold. The net paid up capital of associated financial corporations must be added to that of the authorized foreign branch in the determination of whether or not the authorized foreign branch exceeds the threshold.
