6 Permanent Establishment Tax Analysis tax and accounting engagements in full — what the client came to us with, what we did, and what it was worth. Each one is specific to permanent establishment tax analysis work, not a general example.
Case Study 1 · Deadline rescue
Filed On Time From A Standing Start, $71,000 Penalty Avoided — Canadian with a US, Calgary
Client: A Canadian with a US employer · Where: Calgary, Alberta · Engagement: 4 weeks, fixed fee
Penalty avoided$71,000
Turnaround4 weeks
FiledOn time
The situation
A Canadian with a US employer in Calgary, Alberta came to us 4 weeks before its filing deadline with a departure year filed as a normal resident return with no deemed disposition reported. A late filing would have triggered a penalty of roughly $71,000 before interest.
What we did
We worked backwards from the deadline. We reported the deemed disposition properly on the departure return and claimed the foreign tax credits that had been left unused, prioritising the items that actually gated the filing and deferring everything that did not.
The result
The return was filed on time and complete. The $71,000 penalty never arose, and the compliance calendar we set means the next deadline is scheduled rather than discovered.
Case Study 2 · Records and systems rebuilt
Books Rebuilt From Source, $7,300 In Unclaimed Input Tax Found — Dual Citizen with a, London
Client: A dual citizen with a US retirement account · Where: London, Ontario · Engagement: 3 weeks, fixed fee
Unclaimed tax found$7,300
Records rebuilt28 months
ProcessDocumented
The situation
A dual citizen with a US retirement account in London, Ontario could not answer basic questions about its own numbers, because 25% withholding on gross Canadian rent where a section 216 election would have taxed only the net sat between the bank statements and the ledger.
What we did
We restructured the US holding so the Canadian and US characterisations aligned, ending the double taxation going forward, then documented the process so the work does not depend on any one person remembering how it was done.
The result
Records rebuilt and reconciled, $7,300 recovered in input tax credits that the old file could not support, and a documented monthly process now in place.
Case Study 3 · Objection and relief
Desk-Review Assessment Of $139,000 Vacated — Snowbird Spending Winters in, Kelowna
Client: A snowbird spending winters in Arizona · Where: Kelowna, British Columbia · Engagement: 7 weeks, fixed fee
Assessment vacated$139,000
Supporting recordsNow on file
AccountCleared
The situation
A snowbird spending winters in Arizona in Kelowna, British Columbia was carrying $139,000 of penalties and interest arising from a US LLC taxed as a corporation in Canada, producing double tax on the same income, much of it accumulated during a period the CRA itself had delayed.
What we did
We filed the outstanding T1135 disclosures through the Voluntary Disclosures Program, which eliminated the penalty exposure entirely and framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result
The assessment was vacated. $139,000 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Case Study 4 · Planning that cut the bill
$59,000 Saved By Correcting What Prior Filings Had Missed — US Citizen Living in, Hamilton
Client: A US citizen living in Canada · Where: Hamilton, Ontario · Engagement: 3 weeks, fixed fee
Saving identified$59,000
RecurringYes
Positions documentedAll
The situation
A US citizen living in Canada in Hamilton, Ontario asked for a second opinion on permanent establishment tax analysis after three years of rising tax. The review found foreign accounts that had passed the $100,000 T1135 threshold three years earlier.
What we did
We built the comparison first — current structure against two alternatives — and then filed the section 216 election with the supporting rental statements and recovered the excess withholding as a refund.
The result
First-year saving of $59,000, with the same benefit recurring. Every position taken is documented and supported in the file.
Case Study 5 · Scaling without breaking
Scaled To 25 Staff With $111,000 Of Working Capital Freed — Shareholder of a US, Victoria
Client: A shareholder of a US LLC · Where: Victoria, British Columbia · Engagement: 10 weeks, fixed fee
Headcount reached25
Working capital freed$111,000
Missed deadlinesZero
The situation
A shareholder of a US LLC in Victoria, British Columbia was growing fast — headcount to 25 in eighteen months — and the back office had not kept up. US tax paid but no foreign tax credit claimed on the Canadian return was the first thing to break.
What we did
We reported the deemed disposition properly on the departure return and claimed the foreign tax credits that had been left unused, and built the compliance calendar for the size the business was becoming rather than the size it had been.
The result
The business reached 25 staff with no missed remittance and no late filing. $111,000 of working capital was freed in the process.
Case Study 6 · Cash and remittance control
Instalments Rebased, $140,000 Of Cash Returned To The Business — Inbound Transferee on Assignment, Mississauga
Client: An inbound transferee on assignment · Where: Mississauga, Ontario · Engagement: 5 weeks, fixed fee
Cash returned$140,000
Instalment basisCurrent year
ReviewedQuarterly
The situation
An inbound transferee on assignment in Mississauga, Ontario was paying instalments calculated on a prior year that no longer reflected the business. A departure year filed as a normal resident return with no deemed disposition reported was tying up $140,000 of cash.
What we did
We rebased the instalments on the current-year estimate rather than the prior-year default, and restructured the US holding so the Canadian and US characterisations aligned, ending the double taxation going forward.
The result
$140,000 of cash stayed in the business, the penalty cycle ended, and the instalment position is reviewed each quarter against actual results.
Reviewed for the 2025 tax year by Udit Gupta, Certified Tax Accountant. Figures describe representative engagements of this type; outcomes depend on your own facts. Client names and identifying details are omitted for confidentiality.
