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

Canada: Tax residency, permanent establishment relief

Multinational entities and individuals can continue to rely on previously announced relief from the Canada Revenue Agency (CRA) regarding cross-border tax issues caused by travel restrictions in response to the coronavirus (COVID-19) pandemic.

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The relief continues until 31 August 2020.

The CRA extended the application of the relief guidance—thus, prolonged stays in Canada that solely result from travel restrictions due to COVID-19 will not necessarily affect the tax residency or permanent establishment of a non-resident entity. The guidance also clarifies that these 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. In addition, the CRA's guidance provides administrative relief to reflect its processing delays regarding certain withholding tax waiver requests and “section 116 certificates.”

Previously, the CRA indicated that its guidance would only apply from 16 March 2020 to 29 June 2020, but that it was prepared to extend its relief measures when needed.


Read a June 2020 report [PDF 180 KB] prepared by the KPMG member firm in Canada

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