CRA indicates that decommissioning work is of the type covered by the construction PE Article

A Canadian-resident company, which agreed to decommission various offshore oil or gas platforms, arranges for a non-resident affiliate to perform subcontract work at the same Canadian location in two separate four-month work periods (each covered by a separate subcontract) occurring in two successive years, and separated by a work stint of the non-resident for a separate non-resident customer.

CRA first confirmed that demolition and other decommissioning work comes within the scope of the standard OECD-based “construction PE” article (Art. 5(3)). Turning to the 12-month test therein, CRA indicated that the two work segments might very well be considered as a single unit, in which case the non-resident would be considered to have a Canadian permanent establishment if the work on the first segment commenced more than 12 months before the completion of the second segment.

Neal Armstrong Summary of 16 January 2017 External T.I. 2016-0655701E5 under Treaties – Art. 5.