Where the conditions in Art. V, 9(b) of the Canada-U.S. Convention (respecting a services PE) are satisfied during a taxation year respecting a particular project, which continues for several months longer in the following taxation year, but with the 183-day criteria not met in that subsequent year, will CRA consider that the enterprise nonetheless is deemed to have a permanent establishment in Canada during the subsequent year?
CRA responded that "Since paragraph 9(b) of Article V of the Convention specifies that the 183-day test applies to 'any twelve-month period', that period may not correspond to the taxation year of the taxpayer," and then provided the following example:
Pursuant to Article V, subparagraph 9(b) of the Convention, a United States enterprise, whose fiscal year-end is December 31, which provides services on an ongoing basis from January 15, 20_1, to January 25 20_2 shall be deemed to provide such services through a permanent establishment in Canada for the entire period. Indeed, the 183-day test is respected during any twelve-month period for all the services rendered in 20_1 and 20_2. More specifically, the 183-day test is met for the twelve-month period commencing on January 15, 20_1 and ending on January 14, 20_2. The 183-day test is also met for the remainder of the work performed in January 20_2 since the threshold of 183 days is reached for the twelve-month period beginning on February 26, 20_1 and ending on January 25, 20_2.