3 December 2013 TEI Roundtable, 2013-0510851C6 - 2013 TEI – Question 9: Tax residency certificates.

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 certificate of residency can be issued in the name of a Canadian partnership on the basis of the Canadian residency of all its partners?

Position: No.

Reasons: A partnership, in itself, is not considered resident.

TEI – CRA Liaison Meeting
December 3, 2013

Question 9: Tax Residency Certificates

When entering a competitive bidding process for contracts in foreign jurisdictions, Canadian businesses are frequently required to provide — on an urgent time frame — tax residency certificates to their customers.  CRA does not issue tax residency certificates in the name of a Canadian partnership (as defined in the ITA), so separate residency certificates must be obtained in the names of each of the entity's partners. Many Canadian companies experience commercial disadvantages with international competitors where they are required to explain to foreign customers — who are unfamiliar with tax legislation and Canadian administrative practice — how corporate residency certificates are obtained in a partnership setting. (The challenge is compounded where the bidding partnership is in a tiered-partnership structure).  In some cases, the customers are unwilling or unable to countenance the delay required to obtain the certificate for all the partners, thereby resulting in lost commercial opportunities for Canadian companies.

Would CRA be willing to issue Canadian tax residency certificates in the name of a Canadian partnership on the basis of the Canadian residency of all its partners? We appreciate that a Canadian partnership does not have a tax residence per se, but in certifying the Canadian residence for all of an entity's partners the Canadian residency of the partnership can effectively be established.  If the CRA were willing to issue a Canadian tax residency certificate in the name of a Canadian partnership on the basis of CRA-approved qualifying status of the Canadian partners, the competitive posture of Canadian businesses would be significantly improved. We invite CRA's response.

CRA Response:

The CRA has established procedures for the "certificate of residency" service. Under these procedures, those eligible to obtain a certificate of residency from the CRA are:

• an individual;
• a corporation;
• a trust;
• a non-profit organization, or
• a charity

that is considered resident in Canada.

Through these procedures, a certificate of residency may be issued by the CRA as proof that the taxpayer has filed returns as a resident of Canada. Further information on this service is available through the CRA website at http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/crtrs-eng.html.

We appreciate the comments of the TEI in this regard. Consideration of such issues gives the CRA the opportunity to review or improve the tools currently in place, and to ensure we are always looking to improve the services that we provide. However, while the requirements and obligations involved in carrying on business in a foreign jurisdiction may present challenges, a certificate of residency is not currently available to a partnership. As you have noted, in itself, a partnership is not considered resident in Canada.

Robert Demeter
2013-051085