Information returns relating to foreign affiliates
Who has to report?
Form T1134 consists of a Summary and Supplements. A separate supplement must be filed for each foreign affiliate (non-resident corporation or non-resident trust) of the taxpayer or partnership that is either of the following:
- controlled foreign affiliate
- non-controlled foreign affiliate
Only the lowest-tiered Canadian corporation has to report on its foreign affiliate. For example, if Canco 1 owns 100% of the shares of Canco 2 and if Canco 2 owns 100% of the shares of Foreignco 1, only Canco 2 has to report, even though Foreignco 1 is a foreign affiliate of Canco 1.
A non-resident trust that's considered to be resident under section 94 of the Income Tax Act for purposes of Part I (discretionary trust) is also considered resident for purposes of the foreign-affiliate reporting rules. As a result, such a trust may have to file Form T1134.
What has to be reported?
The required information is described in detail on form T1134, Information Return Relating to Controlled and Not-Controlled Foreign Affiliates:
- T1134 Summary – Part I, Section 1 and 2 of the summary must be completed for each reporting entity. Part I, Section 3 of the summary must be completed by the reporting entity who is reporting on one or more controlled foreign affiliates. (This information is required once for a group of persons that are related to each other. Another person/partnership of the related group can report this section).
- T1134 Supplement – Part II, Section 1, 2, 3, 4A and Part IV of a separate supplement must be filed for each foreign affiliate. A separate supplement must be filed in full for each controlled foreign affiliate.
The applicable form is due within 15 months of the end of the reporting taxpayer's tax year or, in the case of a partnership, fiscal period.
The reporting requirements apply to tax years that start after 1995.
Can I e-file this form?
Corporations can EFILE Form T1134 electronically for the 2015 and later taxation years as of May 15, 2017.
By filing electronically, you will receive a confirmation number at once to tell you that the Canada Revenue Agency (CRA) has received your form(s). For paper filers, please send the original return, amended return, or any additional information to the address provided on the back of the form.
In the future, the CRA will make the electronic filing of Form T1134 available for Partnerships and will announce when the service becomes available.
Do not file Form T1134 if the total cost amount to the reporting entity at any time in the year of the interest in all foreign affiliates was less than $100,000 and the foreign affiliate is "dormant" or "inactive" for the affiliate’s tax year ending in your tax year.
The threshold for a "dormant" or "inactive" foreign affiliate (for which reporting is not required) has been raised. The de minimis test is changed from "less than $10,000 gross receipts, and assets with a total fair market value of no more than $100,000" to "less than $25,000 gross receipts, and assets with a total fair market value of no more than $1,000,000". This will reduce the number of foreign affiliates for which reporting is required.
Administrative relief from reporting is provided for short tax years, for example, where there is a deemed year-end due to a change of control. Reporting for the normal 12 month tax year or fiscal period will be sufficient if the information that would otherwise be reported for the short tax year or fiscal period, for example, less than 12 months, is included on the T1134 return that is filed for the normal year-end. A separate filing for the short tax year is not required. This is consistent with the policy that has been in place for form T106, Information Return of Non-Arm's Length Transactions with Non-Residents.
Reporting on the organizational structure (Part I, Section 3)
If you are reporting on one or more controlled foreign affiliates, Part I, Section 3 requires you to produce information on the organizational structure once for a group of persons that are related to each other. Under the old version of the form (T1134B), you were able to satisfy this requirement by submitting a group organizational chart that included the requested information. Now, Part I, Section 3 of the new T1134 requires you to enter information of the group organizational structure into specific data fields.
We understand that if you are reporting on a tiered structure of foreign affiliates in this new format, area B of Section 3 would require you to complete several lines of repetitive information. To reduce this filing burden, the Canada Revenue Agency will accept information limited only to each foreign affiliate of the reporting entity that has a direct equity percentage in any other foreign affiliate of the reporting entity.
If the foreign affiliate of the reporting entity does not have a direct equity percentage in another foreign affiliate of the reporting entity, but does have an equity percentage, you are not required to provide information regarding this situation in area B of Section 3.
In summary, when completing Part I, Section 3B, list the name and country code of the country of residence of each foreign affiliate of the reporting entity that has a direct equity percentage in any other foreign affiliate of the reporting entity. Include the foreign affiliate’s equity percentage and direct equity percentage in the other foreign affiliate.
Forms and Publications
- Questions and answers about Form T1134 (Frequently asked questions)
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