CRA considers that a Treaty exemption for income does not preclude being an eligible entity for CEWS purposes
The definition of “eligible person” in the “CEWS” (wage subsidy) legislation includes (in para. (a)) a corporation “other than a corporation that is exempt from tax under this Part or is a public institution” and includes (in para. (d)) a specific and limited range of persons that are exempt from tax under s. 149(1). CRA considers that, in light inter alia of this structure, the only exempts excluded from being eligible persons are s. 149(1) exempts who are not specifically listed in para. (d) (or partnerships thereof). Accordingly, CRA has concluded:
[A] non-resident corporation that operates an airline, a portion of whose Canadian source income is not included in the computation of its income under Part I of the Act as a result of the operation of paragraph 81(1)(a) and a provision under an income tax convention between Canada and another State is not a corporation “exempt from tax under Part I” under the definition of “eligible entity” in subsection 125.7(1) and therefore would not be prevented from being an “eligible entity” on that basis.
Neal Armstrong. Summary of 8 May 2020 External T.I. 2020-0847791E5 under s. 125.7(1) – eligible entity – para. (a).