Permanent establishment

A permanent establishment in a province or territory is usually a fixed place of business of the corporation, which includes an office, branch, oil well, farm, timberland, factory, workshop, warehouse, or mine. Each corporate partner in a partnership has a permanent establishment where the partnership has a fixed place of business.

If the corporation does not have a fixed place of business, the corporation's permanent establishment is the principal place in which the corporation's business is conducted.

Note 

Each member of a partnership has a permanent establishment in the province or territory where the partnership has a permanent establishment. This applies to both general and limited partners. For example, where a corporation or its partnership uses substantial machinery or equipment in a particular place at any time in a tax year, it is deemed to have a permanent establishment in that place. Review the locations in which your activities and transactions occur to ensure all permanent establishments are properly identified.

If the corporation carries on business, including partnership business, through an employee or an agent established in a particular place, it is considered to have a permanent establishment in that place if either one of the following applies: 

A corporation that would not otherwise have any permanent establishment in a province or territory and/or a jurisdiction outside of Canada, is deemed to have a permanent establishment at the place designated in its incorporation documents or bylaws as its head office or registered office. So, whether or not the corporation carries on a business in a province or territory, it is entitled to the 10% federal abatement, but subject to provincial or territorial taxation.

See Regulation 400(2) for a complete definition of permanent establishment.

Reporting the jurisdiction

On line 750 of the T2 Corporation Income Tax Return, give the name of the province or territory where you earned your income. Usually, this is where the corporation has its permanent establishment.

If you earned income in more than one province or territory, write "multiple" on line 750 and file Schedule 5, Tax Calculation Supplementary – Corporations, with your return. For more information, see If you have to complete Schedule 5.

Note

The Newfoundland and Labrador offshore area and the Nova Scotia offshore area are considered provinces.

By completing line 750, you ensure that the income taxes go to the correct province or territory. Complete this line even if no tax is payable, or if the provincial jurisdiction is Quebec or Alberta.

Forms and publications

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