Who？

A Canadian resident taxpayer (including an individual, corporation, trust, and certain partnerships) who holds an interest in a foreign affiliate or a controlled foreign affiliate at any time in the year must file Form T1134 to report information about the foreign affiliate.

• A foreign affiliate of a taxpayer is a non-resident corporation in which the taxpayer’s ownership (defined as “equity percentage”) is not less than 1% and the total of the taxpayer’s equity percentage in the corporation (and of each person related to the taxpayer) is not less than 10%.

• A foreign affiliate is also a controlled foreign affiliate where the taxpayer and all related persons (and others not dealing at “arm’s length”) own a sufficient number of shares to have voting control (i.e., more than 50% of the voting shares) of the foreign affiliate or where the taxpayer along with any four or fewer unrelated Canadian resident shareholders together own a sufficient number of shares to have voting control of the foreign affiliate.

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When ？

15 months after the end of the reporting taxpayer’s taxation year

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Exemption

• an individual (other than a trust) does not have to file Form T1134 for the year in which he/she first became a resident of Canada.

• a “dormant” or “inactive” foreign affiliate if the total cost amount of the shares of all foreign affiliates to the taxpayer at any time in the year is less than $100,000. For these purposes, a “dormant” or “inactive” foreign affiliate is one that had gross receipts (including proceeds from the disposition of property) of less than $25,000 in the year and at no time in the year had assets with a total fair market value of more than $1,000,000.

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Penalty

• The penalty for failing to file Form T1134 is $25 per day for up to 100 days (minimum $100 and maximum $2,500).

• Further penalties can apply if failing to file is done knowingly or under circumstances amounting to gross negligence.

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VDP Program

• you own a foreign affiliate but have not properly completed a T1134 form, you may be able to correct past filing deficiencies under the Voluntary Disclosure Program (“VDP”) to avoid penalties and/or potential prosecution.