What is the difference between an Ontario business corporation and a not-for-profit corporation?

Ontario business corporations are incorporated under the Business Corporations Act (Ontario) or the federal Canada Business Corporations Act. Their defining feature is that they can distribute profits to shareholders. The purpose is generally to carry on a business for profit.

Not-for-profit corporations in Ontario are incorporated under the Ontario Not-for-Profit Corporations Act (ONCA), which came into full force in 2021, or federally under the Canada Not-for-profit Corporations Act. They are typically formed to pursue a purpose other than profit, such as a charitable cause, a social purpose, a mutual benefit for members, or a community interest. Not-for-profit corporations do not distribute profits to members; any surplus must be reinvested in the corporation's purposes.

Not-for-profit status under provincial law does not automatically mean charitable status for tax purposes — charitable registration with the CRA is a separate application and approval process that brings significant tax benefits (including issuing donation receipts) but also strict compliance obligations. If your goal is to carry on a social enterprise or a community project, the choice between a business corporation and a not-for-profit involves legal, tax, and governance considerations that are worth working through with a lawyer before incorporating.