Agent status and Crown corporations

Table of Contents


A Crown corporation can be either an agent or a non-agent of Her Majesty in right of Canada, or more simply, an agent or non-agent of the Crown.

This explanatory note, intended for use within the Treasury Board Secretariat when advising on agent status for any new Crown corporation, covers:

  • the significance of agent status,
  • the methods by which a Crown corporation becomes an agent, and
  • the additional control that the Crown exercises over an agent corporation.

Significance of Agency Status to the Crown

A Crown corporation that has agent status enjoys the constitutional immunities, privileges and prerogatives that are enjoyed by the Crown and can bind the Crown by its acts.

The Crown is ultimately fully liable and financially exposed for all actions and decisions by its agent corporation while the corporation is operating within its mandate. In other words, the corporation's assets and liabilities are the assets and liabilities of the government.

For a non-agent corporation, the government is not legally liable for the specific actions of the corporation, unless the corporation acts under explicit direction of the Crown, and has, in the eyes of a court, created a common-law principal-agent relationship.

Some policy analysts believe that even if the Crown corporation is a non-agent, the government may have a moral obligation for the results of the corporation's actions. Although a moral obligation may exist, it remains at the discretion of the government, and not the judiciary, to address. As well, the Crown may be able to manage a moral obligation at a lower cost than would be the case for an agency obligation.

Partial Agency Status

The constituent act of a Crown corporation can make the corporation an agent for some purposes and leave the corporation a non-agent for other purposes.

For example, the Bank of Canada is designated in its constituent act as an agent for fiscal purposes only. If the Bank contracts for the construction of a building, the contract would not legally bind the Crown in the same manner as when the Bank intercedes in foreign exchange markets to support the Canadian currency.

The Canada Mortgage and Housing Corporation is an agent except for purposes of section 14 of its constituent act, under which the corporation is empowered to establish branches and employ agents. Effectively, the exclusion ensures that the agents employed by the Crown corporation are not agents of the Crown.

Benefits to the Corporation of Agency Status

At the same time that the agent status imparts risks to the Crown, it may confer benefits on the corporation. As an agent, the Crown corporation enjoys the constitutional immunities, privileges and prerogatives that are enjoyed by the Crown.

Normally one level of government cannot tax another level. The federal government and its agent Crown corporations are constitutionally immune from provincial and municipal taxation. But the immunity to provincial and municipal taxation and fees is neutralized for most provinces by the Federal-Provincial Fiscal Arrangements Act and reciprocal tax agreements, and the Payments in Lieu of Taxes Act, under which the federal government and its agents, by agreement, voluntarily pay the equivalent provincial and municipal taxes and fees (other than provincial corporate income tax) that are normally applicable to non-agents of the federal government. The Payments in Lieu of Taxes Act might be viewed as a means to make voluntary payments for services rather than the payment of taxes.

A Crown corporation is subject to corporate income taxes only if the Governor in Council decides, on the recommendation of the Minister of Finance, to make a corporation subject to the tax.

A prescribed non-agent Crown corporation is subject to federal and provincial corporate income tax like any private sector corporation.

An agent Crown corporation, prescribed as subject to corporate income tax, pays only federal corporate income tax, and in place of provincial corporate income tax, effectively pays a further 10% federal corporate income tax.

Another consequence of the agency status is that a donation to an agent Crown corporation is automatically classified as a donation to the Crown under the Income Tax Act, whereas any donation to a non-agent Crown corporation is subject to interpretation by the Canada Customs and Revenue Agency on whether the corporation meets the conditions of a charitable organization as defined under the Income Tax Act, i.e., an agent Crown corporation has greater certainty with respect to acceptability that a donation is in compliance with tax law.

While the general rule recognizes that an agent Crown corporation does not legally have to comply with municipal zoning regulations and by-laws, courts have attempted to distinguish between regulations directed at limiting the corporation carrying out its activities from those which are not. For example, a municipal by-law requiring a federal Crown corporation to ensure a clean environment around a facility may prove to be valid, whereas a by-law preventing the Crown corporation from advertising its products is unlikely to be held valid, but it may be that the federal agent Crown corporation may decide to voluntarily comply where appropriate.

Methods to Confer Agent Status on a Crown Corporation

A Crown corporation can become an agent of the Crown as a result of any one of the following events:

Most federal Crown corporations are agents as a result of a provision within their enabling constituent legislation.

The Canada Development Investment Corporation, The Federal Bridge Corporation Limited, and the Old Port of Montreal Corporation Inc. have been deemed agents pursuant to the Government Corporations Operation Act.

A wholly-owned subsidiary Crown corporation can be made an agent pursuant to the Government Corporations Operation Act when

  • the parent Crown corporation is an agent (making the shares of the subsidiary held by the parent, shares held in trust for the Crown), or
  • the subsidiary had been deemed a parent Crown corporation (and therefore the Minister, with the approval of the Governor in Council, appoints the directors).

Should the Governor in Council exercise its authority under the Government Corporations Operation Act to make a Crown corporation an agent, it could also issue a proclamation to deem an agent a non-agent.

The normal structure for the Crown and its parent Crown corporations and subsidiaries follows one of the following:

Crown ... Agent Parent Corporation

Crown ... Agent Parent Corporation ... Agent Wholly-owned Subsidiary

Crown ... Agent Parent Corporation ... Non-agent Wholly-owned Subsidiary

Controls on Agent Crown Corporations

Part X of the Financial Administration Act imposes a standard control and accountability regime on 35 of the 43 Crown corporations and three wholly-owned subsidiaries deemed parent Crown corporations. Within Part X there are additional controls explicitly for agent Crown corporations:

  1. Section 99 notes that, unless the constituent act of the corporation provides otherwise, property held in the name of the agent corporation, is the property of the Crown, and, accordingly, the agent corporation can sell or dispose of property only in accordance with regulations or on the authorization of the Governor in Council.
  2. Section 100 prevents the pledging or mortgaging of real or personal property by an agent corporation when the corporation borrows money or makes any other commitment.
  3. Section 101 requires that for an agent corporation to borrow money externally, it must be both empowered to borrow money and have the authorization of Parliament to do so.


Occasionally Treasury Board analysts ask about the significance of agent status for Crown corporations, and the manner in which the agent status is attained. The Financial Administration Act and other statutes do not provide this information. Accordingly, this document attempts to capture current information and knowledge on the subject.

According to the relevant statutory authority, the 43 federal parent Crown corporations, and three wholly-owned subsidiary Crown corporations deemed parent Crown corporations, consist of:

  • 27 declared agents,
  • 2 partial agents, and
  • 17 non-agents.

The President of the Treasury Board's Annual Report to Parliament on Crown Corporations includes basic information on all Crown corporations including their agent status.

Additional Information

For further information or to comment on this explanatory note, you are encouraged to contact the Crown Corporation Policy and Information Division, Expenditure and Management Strategies Sector, Treasury Board Secretariat at:

400 Cooper Street, 8th Floor
Ottawa, Ontario
K1A 0R5
Telephone: (613) 957-0144
Facsimile: (613) 957-0160

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