11 April 2011 External T.I. 2011-0398811E5 - Requirement to File a CT23

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Whether a non-resident corporation that provides portfolio management and similar services to clients worldwide, including clients in Ontario, has a permanent establishment in Ontario and is therefore required to file an Ontario Corporations Tax Return.

Position: Factual determination. Based on the facts provided, the Corporation does not have a permanent establishment in Ontario.

Reasons: The only activity of the corporation in Ontario was the provision of portfolio management and similar services to investors resident in Ontario. The provision of these services, in and of itself, is not considered to be carrying on business in Ontario for the purposes of deeming a permanent establishment to exist under the Corporations Tax Act.

XXXXXXXXXX
									2011-039881
									Andrea Boyle

April 11, 2011

Dear XXXXXXXXXX :

Re: XXXXXXXXXX
XXXXXXXXXX
Requirement to file an Ontario Corporations Tax Return

This is in reply to your letter of March 2, 2011 in which you asked us to follow up on a Default of Filing Return Notice for 2007 and 2008 which you received from the Ontario Ministry of Revenue ("OMoR"), a copy of which was attached to your letter. You have asked us to confirm that the Corporation is not required to complete Ontario corporate tax returns.

The facts as you have described them are as follows:

1. The corporation is a non-resident corporation, incorporated in the United States.

2. The corporation is extra-provincially registered in Ontario because the Ontario Securities Commission requires companies that are established outside of Ontario register under the Extra-Provincial Corporations Act (Ontario) as a condition to being registered as a portfolio manager or under any other category of registration under Ontario securities law.

3. The corporation does not own or control any assets in Ontario.

4. The corporation does not have any employees in Ontario. All advice provided to Ontario residents is provided from the United States.

5. The corporation has never had a permanent establishment in Ontario, has never owned any real property, timber resource property, or a timber limit in Ontario, and have never disposed of taxable Canadian property that was property situation in Ontario. The corporation does not carry on any business in Ontario.

Our Comments

The information provided in your letter relates to a factual situation, involving a specific taxpayer. As per Information Circular 70-6R5, "Advance Income Tax Rulings", it is not this Directorate's practice to comment on completed transactions involving specific taxpayers. However, during the transition of responsibility for providing interpretations of the Ontario Corporations Tax Act (the "CTA") to the Canada Revenue Agency, this Directorate will undertake the responsibility of addressing the request within your letter.

A corporation is required to file a tax return in Ontario under subsection 75(1) of the CTA if it is liable to tax under the CTA. Pursuant to clause 2(2)(a) of the CTA, non-resident corporations are liable for taxes imposed by the CTA if the corporation has a permanent establishment in Ontario at any time in a taxation year.

You advise that the only activity of the corporation in Ontario is the provision of portfolio management and similar services to investors resident in Ontario. The provision of these services to investors in Ontario, in and of itself, is not considered to be carrying on business in Ontario for purposes of deeming a permanent establishment to exist under the CTA.

Based on the information provided, we are of the view that the Corporation would not have a permanent establishment in Ontario. Accordingly, the Corporation would not be required by subsection 75(1) of the CTA to file an Ontario Corporations Tax Return nor would it be required to file an Exempt from Filing (EFF) Declaration.

A copy of this letter will be forwarded to the Tax Roll Services Unit of the OMoR to take the appropriate measures. In the future, the Corporation may have an obligation to file tax returns in Ontario if the Corporation should have a permanent establishment in Ontario.
We trust that these comments will be of assistance.

Yours truly,

Guy Goulet C.A., M.Fisc.
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

Cc: Ms. Leigh Lamplugh
Manager, Taxroll Administration
Client Accounts and Services Branch
Ontario Ministry of Revenue