A non-resident corporation claimed a deduction under subsection 124(1) of the Income Tax Act (the "Act") for its XXXXXXXXXX taxation year. In addition, you informed us that the Equipment used by a non-resident corporation in connection with the performances by an artist were considered by the TSO to be of sufficient importance to constitute a permanent establishment for the purposes of Reg. 400(2)(e) at each of the venues where it mounted performances.
Initially, the Directorate considered that “the equipment or machinery must be used either for a period of more than 30 consecutive days per site or project or for a period of more than 90 consecutive days within a 12-month period for all projects,” so that the venues did not qualify as PEs. However, it subsequently determined that its policy was that if the taxpayer reported for federal and provincial purposes as having PEs on the basis of a shorter presence at the venues, it should be treated as being “deemed to have a permanent establishment for its XXXXXXXXXX taxation year in each province in which performances were mounted for the purposes of paragraph 400(2)(e) of the Regulations and the application of subsection 124(1) of the Act.”