Canada: Tax residency and permanent establishment relief, travel restrictions (COVID-19)

Canada: Tax residency, permanent establishment relief

Multinational entities and individuals affected by recent international travel restrictions may find relief in new guidance from the Canada Revenue Authority (CRA)—relief provided in response to the coronavirus (COVID-19) pandemic.


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The CRA guidance addresses cross-border tax issues caused by these restrictions. Specifically, the CRA guidance clarifies that prolonged stays in Canada that solely result from travel restrictions will not necessarily affect the tax residency or permanent establishment of a non-resident entity.

The CRA guidance also:

  • Clarifies that the travel restrictions may not affect the tax residency of a non-resident individual, or the ability of a cross-border employee to qualify for treaty benefits on employment income
  • Provides administrative relief to reflect delays in its processing of certain withholding tax waiver requests and “section 116 certificates” due to COVID-19
  • Clarifies that its guidance applies from 16 March 2020 to 29 June 2020
  • Reflects that after 29 June 2020, the CRA will either extend or rescind the guidance

Read a May 2020 report prepared by the KPMG member firm in Canada

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