A non-resident corporation files a T2 return, attaching a completed Sched. 91 (claiming a treaty-based exemption) based on a reasonable belief that it did not have a permanent establishment in Canada. If CRA subsequently disagrees, would it seek to impose late-filing penalties, such as for not timely filing T106 forms, and/or penalties for failing to complete contemporaneous documentation under s. 247 of the Act, and would it provide relief under ss. 220(3) and (3.1)?
In responding “generally, yes,” CRA indicated that where a non-resident taxpayer carries on a business in Canada through a permanent establishment, a failure to meet statutory deadlines will carry the associated statutory penalties – but that CRA will consider, on a case-by-case basis, requests under s. 223(3) and (3.1) for relief of the resulting interest and penalties.