New T1134 Filing Requirements

How will these significant changes impact the information gathering process?

All Canadian taxpayers, and certain partnerships, owning a direct or indirect interest in a foreign affiliate (FA) must generally annually file Form T1134 with the Canada Revenue Agency (CRA). Penalties are applied for late filing.

For taxation years beginning on or after January 1, 2021, the CRA has recently made important changes to the form and has significantly expanded the information required.

Some of the new filing requirements you need to know:

  • Detailed reporting for transfers or reorganizations involving FA shares
  • Reporting of exact shareholdings and tax cost amounts for those shares
  • Details on “upward” loans
  • The segregated reporting of income sources earned by controlled foreign affiliates between arm’s length and non-arm’s length sources
  • The reporting of unapplied losses earned by controlled foreign affiliates

While the new reporting has alleviated some elements required in the previous form and does now allow for certain joint reporting within related groups, work should commence much earlier on gathering the required information, especially since the form is now due 10 months after the end of the taxation year.

Due to the complex nature of this subject matter, readers are urged to seek out their Richter professionals so their individual situations can be properly assessed. Contact us for more information.