CRA continues to not accept the deduction of notional expenses from the profits of PEs of (non-U.S.) non-residents

Notwithstanding a somewhat revised OECD approach, CRA continues to consider (in light of Cudd Pressure and s. 4(b) of the Income Tax Conventions Interpretations Act) that notional expenses are not deductible in computing the profits attributable to a Canadian permanent establishment for Treaty purposes – with the exception of PEs of qualifying U.S. residents, as to which there is an overriding agreement with the U.S. competent authority.

Neal Armstrong. Summary of 2016 IFA Roundtable, Q. 2 under Treaties – Art. 7.