In addition, where appropriate, the CRA will consider adopting a similar approach in determining the residency of a commercial trust.

• Permanent establishment: Non-residents must pay tax on income from a business carried on in Canada. In general, a resident of a country with which Canada has a tax treaty is only liable to pay tax in Canada if the person’s activities meet the definition of “permanent establishment” in the treaty. When the employees of a non-resident entity are required to perform their duties in Canada due to travel restrictions, the CRA will not consider this alone to be sufficient to create a permanent establishment in Canada. The non-resident entity must still file a return for that year, however.

Also, where a dependent agent contracts in Canada on behalf of a non-resident entity during the travel restrictions, activities limited to the period during which the restrictions are in effect will not be considered sufficient to create a permanent establishment in Canada, as long as those activities would not otherwise have been performed in Canada.