The twelve days of Christmas are soon upon us, so, I thought it would be nice if The Tax Issue contributed to the holiday cheer by reproducing for you, the CRA’s twelve indicators to determine where a business is carried on for Canadian tax purposes. I’ll spare you any musical accompaniment. 🙂
One of the basic tenets of Canadian tax law is that any non-resident carrying on business in Canada is subject to tax in Canada. This criterion is similarly relevant in determining whether you are required to collect GST/HST.
So, what does it mean to be “carrying on business in Canada”? There is no clear definition in the legislation, so we must look to the jurisprudence and the CRA’s guidelines.
In 2002, the CRA issued a comprehensive policy statement with regard to whether a business is being carried on in Canada. This policy takes into account the jurisprudence, as well as other factors such as the global economy. The CRA has established a list of twelve factors that determine where a business is carried on for Canadian tax purposes. You can read one per day during the holidays, set them to music, or read them all at once. Just remember, once they’re gone, they won’t be back till next year! 🙂
1. The place where agents and employees of the non-resident are located;
2. The place of delivery;
3. The place of payment;
4. The place where purchases are made or assets acquired;
5. The place from which transactions are solicited;
6. The location of assets or an inventory of goods;
7. The place where business contracts are made;
8. The location of a bank account;
9. The place where a non-resident’s name and business are listed in a directory;
10. The location of a branch or office;
11. The place where the service is performed; and
12. The place of manufacture or production