Permanent establishment

A permanent establishment in a province or territory is usually a fixed place of business of the corporation, which includes an office, branch, oil well, farm, timberland, factory, workshop, warehouse, or mine.

If the corporation does not have a fixed place of business, the corporation's permanent establishment is the principal place in which the corporation's business is conducted.

If the corporation carries on business through an employee or an agent established in a particular place, it is considered to have a permanent establishment in that place if either one of the following applies:

• the employee or agent has general authority to contract for the corporation
• the employee or agent has a stock of merchandise owned by the corporation from which they regularly fill orders received

A corporation that would not otherwise have any permanent establishment in a province or territory and/or a jurisdiction outside of Canada, is deemed to have a permanent establishment at the place designated in its incorporation documents or bylaws as its head office or registered office. So, whether or not the corporation carries on a business in a province or territory, it is entitled to the 10% federal abatement, but subject to provincial or territorial taxation.

See Regulation 400(2) of the Income Tax Regulations for a complete definition of permanent establishment.

Reporting the jurisdiction

On line 750 of the T2 Corporation Income Tax Return, give the name of the province or territory where you earned your income. Usually, this is where the corporation has its permanent establishment.

If you earned income in more than one province or territory, write "multiple" on line 750 and file Schedule 5, Tax Calculation Supplementary – Corporations, with your return. For more information, see Do you have to file Schedule 5?

By completing line 750, you ensure that the income taxes go to the correct province or territory. Complete this line even if no tax is payable, or if the provincial jurisdiction is Quebec or Alberta.

Forms and publications

• Interpretation bulletin IT-177, Permanent Establishment of a Corporation in a Province and of a Foreign Enterprise in Canada
• T2 Corporation Income Tax Return
• Guide 4012, T2 Corporation Income Tax Guide
• Schedule 5, Tax Calculation Supplementary – Corporations

Date modified:

2017-04-20