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

Canada: Extended tax-residency relief

The Canada Revenue Agency (CRA) further extended the time for relief provided in response to cross-border tax issues arising from the imposition of travel restrictions that were imposed in response to the coronavirus (COVID-19) pandemic.

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The extended date for the tax relief is 30 September 2020.

The CRA relief generally provides that 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. Previously, the CRA granted this relief from 16 March 2020 to 31 August 2020.

The extended relief: 

  • Provides that 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
  • 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 its processing delays regarding certain withholding tax waiver requests and Section 116 Certificates

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

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