The Basics of Offshore Tax Planning For Canadian Corporations – Part 10

Canada Revenue Agency Reporting Requirements

A Canco which controls a Forco will have an obligation to submit certain special returns to the Canada Revenue Agency annually.

Failure to file such returns on a timely basis will expose Canco to significant penalties.

Form T1134

Any Canadian resident, whether a corporation or individual, with respect to which there is a “foreign affiliate” (“FA”) in a taxation year, must file form T1134 within 15 months after the end of that year with the CRA. An exception applies in connection with “dormant” FAs.

This form provides detailed information regarding the corporate structure in relation to FAs, including ownership percentages. In addition, the form requires disclosure of various information regarding the various sources of income earned by the FA in the year.

If a Canadian resident has more than one FA, only one Form T1134 should be filed by that taxpayer. The T1134 will have separate supporting schedules for each FA.

The T1134 reporting for interests in FAs is in lieu of any requirement to report such interests on the more general “Foreign Property” reporting form (T1135).
Accordingly, Canco will need to file form T1134 with the CRA annually in connection with its interest in Forco.

Form T106

A Canadian resident that has more than $1,000,000 in business-related transactions with non-residents with which it does not deal at arm’s length is required to file form T106 with the CRA each year by its normal filing due date.
Accordingly, if Canco has transactions that total more than $1,000,000 with Forco, or any other non-arm’s length FA, form T106 must be filed.

This form provides detailed information on the nature of such transactions, as well as some information on the transfer pricing methodology that is used.

In accordance with Circular 230 Disclosure


Mr. Atlas is a Toronto-based Chartered Accountant who practices as an independent consultant on a wide-range of international and domestic tax issues. Most of his practice consists of advising accounting and law firms on high-level tax issues. Prior to forming an independent tax practice in 1991, was Partner in charge of tax practice of major independent accounting firm in Toronto. Advises clients worldwide. Author of leading book, Canadian Taxation of Non-Residents, considered one of the few Canadian tax professionals, outside of the big accounting and law firms, who is an expert on high-level international tax matters.

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