Definitions of PE in Canada’s treaties generally include: (1) a fixed place of business, and (2) a person acting in Canada on behalf of the non-resident (Agency PE). Most tax treaties entered into by Canada provide that a resident of the other relevant jurisdiction will be exempt from Canadian income tax on income from carrying on business in Canada as long as the non-resident entity does not have a permanent establishment (PE) in Canada. The extension of administrative relief applies only in respect of individuals and does not extend to the determination of corporate residency. The Supplemental Guidance extends the above relief until the earlier of the following dates: that upon which the travel restrictions are lifted and December 31, 2021.
Also, the CRA would not consider days during which an individual is present in Canada and unable to return to their country of residence solely because of travel restrictions to count towards the 183-day deemed residency test. The Initial Guidance provided that the CRA would not consider an individual to be resident in Canada under the common law where they have remained in Canada solely because of travel restrictions. A special rule in the Income Tax Act (Canada) (ITA) also deems an individual who is physically present in Canada for 183 or more days in a tax year to be considered resident in Canada for the year. Residence for individuals is generally a common law determination. For situations not addressed in the Supplemental Guidance, the CRA suggests contacting the agency directly at ISSUES At the time of expiry, the CRA declined to extend the guidance.Īlthough the Supplemental Guidance does not address all cross-border taxation issues raised by COVID-19-related travel restrictions, it is helpful in a number of circumstances, particularly for individuals whose employment duties were affected by COVID-19 travel restrictions and who are now in the process of filing their 2020 tax returns. The Initial Guidance was mostly effective from Mato September 30, 2020.
Please see our bulletin on the Initial Guidance here. The Initial Guidance provided, among other things, that an individual’s physical presence in Canada as a result of COVID-19-related travel restrictions would not, on its own, cause such individual or a corporation to become resident in Canada or cause a corporation to have a permanent establishment in Canada. This Supplemental Guidance extends certain administrative relief that was originally released on (the Initial Guidance). On April 1, 2021, the Canada Revenue Agency (CRA) released supplemental guidance on international income tax issues raised by the COVID-19 crisis. Total Rewards (Pensions & Benefits) Specialistīilingual (English/French) Collections AdministratorĬonsulting Lawyers, Corporate & Commercialīlakes inSource - Bilingual Staff Lawyersīlakes inSource - Staff Lawyers (Toronto) IT Service Representative – Montréal Office (Permanent position)īilingual (English/French) IT Service Representative Search the Blakes website Submit your searchĪssociate, Financial Services (Vancouver)Ĭorporate Securities Associate (Vancouver)Īssociate, Litigation & Dispute Resolution (Calgary)Īssociate, Commercial Real Estate (Toronto)Īssociate, Corporate Commercial / Energy (Calgary)īilingual (English/French) Proposal Specialist