9. Quebec -

9. Quebec

Quebec refers to “establishments” instead of “permanent establishments”. Quebec defines an “establishment” as a fixed place where the taxpayer carries on business or, if there is no such place, the taxpayer’s principal place of business. This specifically includes an office, a branch, a mine, an oil or gas well, a farm, timber land, a factory, a warehouse or a workshop. The following series of rules is provided:

  • a corporation has an establishment in each province in which an immovable owned by the corporation and used principally for the purpose of earning or producing gross revenue that is rent is situated;
  • where a taxpayer carries on business through an employee, agent or mandatary established in a particular place, who has general authority to contract for the employer or mandator or who has a stock of merchandise owned by such employer or mandator from which the employee, agent or mandatary regularly fills orders which the employee, agent or mandatary receives, the taxpayer is deemed to have an establishment in that place;
  • a taxpayer is not deemed to have an establishment for the sole reason that the taxpayer has business dealings through a commission agent, a broker or other independent agent or maintains an office or warehouse solely for the purchase of merchandise; similarly, the taxpayer is not deemed to have an establishment in a place solely because of the taxpayer’s control over a subsidiary carrying on business in that place;
  • a corporation that has an establishment in Canada and is the owner of land in a province is deemed to have with respect to such land an establishment in that province;
  • a taxpayer using at a particular place substantial machinery or material at a particular time in a taxation year is deemed to have an establishment at that place;
  • an insurance corporation is deemed to have an establishment at each place where it is registered or holds a permit to carry on business;
  • if, under the above rules, a corporation would not have an establishment, the corporation is deemed to have an establishment at the place designated in its articles as its head office;
  • where, in a taxation year, a corporation not resident in Canada operates a mine, produces, processes, preserves, packs or builds goods or products in whole or in part, or produces or presents a public show, it is deemed to have an establishment at the place, in Canada, where it carries on one or the other of these activities; and
  • the above two rules do not apply in respect of a taxpayer’s activities relating to a business of the taxpayer that consists in operating a sports team that plays one or more of its matches or games, or that takes part in one or more competitions, outside Quebec, or to a sports club if, in connection with its activities, one of its members plays a match or game, or takes part in a competition, outside Québec.

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