T1134: due 10 months after year end for each foreign affiliate

Who has to file a T1134?

Section 233.4 makes a "reporting entity" file a return for each foreign affiliate it has at any time in the year laws-lois.justice.gc.ca. That covers Canadian resident taxpayers of every kind, plus most partnerships.

The lowest tier rule trips people up. If Canco 1 owns Canco 2 and Canco 2 owns Foreignco, only Canco 2 files for Foreignco canada.ca. A nonresident discretionary trust deemed resident under section 94 is also treated as resident for these rules, so it may have to file.

A nonresident corporation is a foreign affiliate when your client's equity percentage is at least 1% and your client plus related persons hold at least 10% in total laws-lois.justice.gc.ca. Every such affiliate needs a supplement, controlled or not, even when it was formed or sold partway through the year or has no year end inside your client's year canada.ca.

When is the T1134 due?

For taxation years beginning after 2020, the T1134 is due 10 months after the end of the reporting entity's taxation year, or a partnership's fiscal period canada.ca. The deadline was cut in two steps from the old 15 months.

Worked dates: a corporation with a December 31, 2025 year end files by October 31, 2026. A March 31, 2026 year end files by January 31, 2027. The T2 is due 6 months after year end, so the T1134 lands four months later and is easy to drop off the calendar once the T2 is filed. See T2 filing deadline.

A short taxation year, such as a deemed year end on an acquisition of control, doesn't need its own T1134. The CRA lets you include that information in the return for the normal year end canada.ca.

The dormant or inactive affiliate exemption

For taxation years beginning after 2020, you skip the supplement for an affiliate only when all three of these conditions hold, tested at the legal entity level canada.ca.

Before 2021 the gross receipts limit was $25,000. In a related group filing, each member tests its own cost amount, and unless every member is under $100,000 the affiliate needs a supplement.

The gotcha: the exemption removes the supplement, not the summary. Part I of the summary is still completed for each reporting entity, and the dormant affiliate is listed in Section 3.D and flagged as dormant in the organizational chart in Section 3.C.

What goes into the summary and each supplement

The 2021 version has a summary for each reporting entity and a supplement for each affiliate: Part II Sections 1, 2 and 3.A plus Part IV for every affiliate, and a full supplement, adding Part II Section 3.B and Part III, for a controlled foreign affiliate canada.ca. The forms are on the canada.ca.

Attach unconsolidated financial statements for every controlled foreign affiliate and every affiliate where your client directly or indirectly holds 20% or more of the votes. Consolidated statements aren't accepted canada.ca. The 20% test doesn't multiply through: a client owning 75% of FA1, which owns 20% of FA2, files FA2's statements.

Related reporting entities with the same year end and the same reporting currency can file as a group, with one representative filing one set for every member. Once your client picks group or single filing for a year, that choice sticks for the year. Corporations and partnerships EFILE through tax software and get a confirmation number at once.

T1134 penalties, with the arithmetic

The CRA's foreign reporting penalty table applies every row below to the T1134 canada.ca. The amounts come from section 162 laws-lois.justice.gc.ca and subsection 163(2.4) laws-lois.justice.gc.ca.

Worked example: your client files a T1134 60 days late with nothing deliberate. Only 162(7) applies: $25 times 60 days is $1,500, which beats the $100 minimum, so the penalty is $1,500.

Now a knowing failure that runs past 24 months, with $1,000,000 of cost in the affiliate. 162(7) is $2,500. 162(10) is $500 times 24, or $12,000, less $2,500, so $9,500. 162(10.1) is 5% of $1,000,000, or $50,000, less the $12,000 already charged, so $38,000. The total is $50,000, exactly 5% of cost.

For the 5% layer, shares or debt held through a controlled foreign affiliate count at 20% of their cost to that affiliate under subsection 162(10.2).

Missing information, reassessment and late returns

Section 233.5 gives the T1134 a due diligence exception that the T1135 doesn't get. Information that isn't available is excused if your client disclosed its unavailability in the return, exercised due diligence trying to get it, and files it within 90 days of it becoming available laws-lois.justice.gc.ca. The CRA wants that disclosure in Part IV, with the reason and the steps taken canada.ca.

Foreign affiliates also keep the year open longer. Subparagraph 152(4)(b)(iii) gives the CRA three more years past the normal reassessment period for a reassessment made in respect of income, a loss or another amount in relation to a foreign affiliate laws-lois.justice.gc.ca. That extension doesn't depend on a late T1134. The separate (b.2) extension tied to a late foreign reporting form refers only to the T1135. See CRA reassessment period.

For years your client never filed, compare the Voluntary Disclosures Program with a request for taxpayer relief before the CRA makes contact.