CRA indicates that CIBC World Markets may not permit a non-resident to make an ETA s. 156 election through its Canadian PE

In CIBC World Markets, the Federal Court of Appeal found that a non-resident permanent establishment of CIBC had deemed separate person status sufficient to enjoy zero-rating on services supplied to it by CIBC World Markets, notwithstanding an ETA s. 150 election between the two Canadian affiliates. When asked as to whether it considered this decision to be portable to the situation where a non-resident person with a branch in Canada wishes that branch to be treated as resident in Canada for purposes of the ETA s. 156 election (presumably to be made with a Canadian corporate affiliate), CRA responded that it was considering the decision’s “impact on section 132,” but that:

Subsection 132(2) deems a non-resident person with a permanent establishment in Canada to be resident in Canada “in respect of, but only in respect of activities of the person carried on through that establishment”. Based on the clear legislative wording, it has been the CRA’s position that subsection 132(2) does not deem a non-resident person as a whole to be resident in Canada for purposes of the Part IX of the ETA. It has therefore been the CRA’s view that the non-resident person in your scenario would not be eligible to make the section 156 election.

Neal Armstrong. Summary of 27 February 2020 CBA Roundtable, Q.5 under s. 132(2).