T1134 Filing Requirements: What Every CPA With Foreign Affiliate Clients Needs to Know

What Is the T1134 Form, and Where Does It Fit in Canada’s Foreign Reporting Package? 

The T1134 is the CRA’s Information Return Relating to Controlled and Non-Controlled Foreign Affiliates. This form is used when the reporting entity has a reportable foreign affiliate during the year. 

In general, a foreign affiliate for T1134 purposes can include a non-resident corporation or some non-resident trusts that comply with the relevant rules in the Canadian Income Tax Act. 

There are two main components of the return: T1134 Summary and T1134 Supplement. 

T1134 Summary: The T1134 Summary contains information regarding the reporting entity and its affiliate structure in foreign countries.

T1134 Supplement: The T1134 Supplement contains detailed information on individual overseas affiliates. 

The 2021 version of Form T1134 applies to tax years or fiscal periods that began after 2020. 

Why Does T1134 Matter to CPAs? 

The information required for T1134 reporting may differ from what the Canadian client maintains in their regular accounting file.

For example, the CPA may need: 

• Foreign affiliate ownership details
• Share classes and voting rights
• Direct and indirect ownership information
• Financial statements
• Foreign tax information
• Revenue details
• Information about FAPI
• Surplus account information
• Transactions with related parties
• Information about changes in ownership
• Details about certain elections and transactions

T1134 Filing Requirements: Who Must File?

A reporting entity (a Canadian corporation, an individual, a trust, or certain types of partnerships) that holds a foreign affiliate may have to file a T1134 supplement for that foreign affiliate. 

This will cover controlled and non-controlled foreign affiliates. A number of factors determine who within a group has to file:

1. Do not assume that only one Canadian company in a group has to file: The filing obligation is determined by which Canadian reporting entities possess the pertinent foreign affiliate interests. Some interconnected Canadian reporting entities might also be eligible to utilize the group filing regulations. 

2. All entities with their own ownership are required to file. If another company in the group directly owns shares of another foreign affiliate, then that company has its own filing obligation.

3. Some non-resident trusts must also file. A non-resident trust that is deemed to be resident under section 94 may also be required to file.

4. New immigrants get a break. If someone becomes a Canadian tax resident for the first time, they don’t necessarily need to file T1134 in the first year. However, if someone has departed Canada and returns, this break period does not repeat.

5. Related groups can file together. A group filing election can be elected where the entities are related under subsection 251(2) of the Income Tax Act, have the same tax year-end, and employ the same functional currency. The information for the foreign affiliates of ALL Group members must be included in the filing entity’s T1134. All group members must consent to the election.

T1134 Deadline: Due Date, Year-End Mismatches, and the File-Incomplete Rule 

Over the years, the T1134 deadline has been shortened. The T1134 deadline can be easy for CPAs to miss. Here is how the date has changed:

• Tax years before 2020: due 15 months after the year-end
• Tax years starting in 2020: due 12 months after the year-end
• Tax years starting after 2020: (the current rule) due 10 months after the year-end

In simple terms: For example, companies with a year-end of December 31, 2025, will be required to file T1134 by Oct. 31, 2026.

This is the biggest trap for T1134 compliance. Firms that see it as an afterthought for T2 are likely to file late. 

This is more difficult at the end of the year. The T1134 reports on the reporting entity’s year-end and not the foreign affiliate’s. If the affiliate doesn’t have the same fiscal year, it is still important to allocate the affiliate’s fiscal year activity to the correct Canadian tax year.

Do this early in the engagement. Not for filing day!

Here is one more thing you should know: A T1134 lacking significant essential information could be considered invalid for filing. Consequently, CPAs must ensure that the summary and necessary supplements are fully completed prior to submission.

If you submit the summary but not a supplement, the CRA will not consider it filed. The late clock is still ticking until it’s in. 

For tax years or fiscal periods beginning after 2020, the T1134 must generally be filed within 10 months after the end of the reporting entity’s tax year or fiscal period.

Canadian Tax Year-End	T1134 Deadline
December 31, 2025	October 31, 2026
March 31, 2026	January 31, 2027
June 30, 2026	April 30, 2027
September 30, 2026	July 31, 2027

The deadline is based on the reporting entity’s tax year, not simply the foreign affiliate’s year-end.

Late Filing Penalty After Missing Deadlines

Late filing may result in penalties. The CRA may impose a penalty of up to $2,500 per T1134 return, a minimum of $100 and a maximum of $25 per day. A $500 per month penalty (up to $12,000) is in effect for failure to file a return due to intentional failure or gross negligence. The CRA may also have up to six additional years to reassess the return when a T1134 was not filed. 

Foreign Affiliate vs. Controlled Foreign Affiliate: What CPAs Need to Know 

Not all foreign affiliates need the same level of reporting. The classification affects the entire workload.

A foreign affiliate (FA) is a non-resident corporation in which the following applies:

• The Canadian taxpayer owns at least 1% equity, and
• The taxpayer and all related persons own not less than 10% combined. 

The classification of a foreign entity for legal and tax purposes should be reviewed before deciding if it qualifies as a foreign affiliate for T1134 purposes. It is important not to presume that the name or legal structure of an entity alone determines its tax treatment in Canada. 

A controlled foreign affiliate (CFA) is a foreign affiliate that is controlled by:

• The taxpayer alone 
• The taxpayer and the related people 
• With ‘de facto control’ (real control without majority share) 

CFAs involve more work:

• A detailed Supplement must be prepared, including information on surplus accounts and share transactions.
• CFAs result in Foreign Accrual Property Income (FAPI) rules, passive income taxed in Canada even if not distributed, and other taxing issues.
• Full financial statements are more often required for CFAs

Draw a simple map before you touch the form. Write down all of the foreign entities. Tag each one as FA, CFA, or none. 

Equity Percentage: How Ownership Is Measured for T1134 Purposes

The term “equity percentage” is defined as specific legal meaning under subsection 95(4) of the Income Tax Act.

It’s not only the shares your client owns in his/her name. It includes:

• Direct equity: Shares that are held outright.
• Indirect equity: the equity that is held through other businesses.

This is important in two ways:

Indirect ownership can create a filing duty on its own. A foreign company can hold a Canadian company, which in turn can hold the other foreign company. If the Canadian company is not a direct shareholder, the lower-tier entity may still have a reportable equity percentage. 

Tiered structures multiply the work. If there is a multi-level ownership chain, you must calculate the equity percentage at each level. The CRA does provide a shortcut: you can fill out an electronic organizational chart instead of detailed tables line by line.

One of the most frequently filed incorrect percentage terms is the equity percentage, particularly when the structure is family-owned or multi-owner. 

What Information Does T1134 Require: Form Structure and What to Attach

This is the latest version of T1134, with a longer and more detailed text than previous versions. However, it also reduced some requirements that were previously mandatory.

T1134 Summary covers:

• Reporting entity details
• Group filing election, if used
• Any Canadian-level reorganizations during the year
• Organizational chart
• Dormant or inactive affiliates

T1134 Supplement (filed per affiliate) covers:

• Capital Stock and Ownership Information 
• Equity percentage, qualifying interests, tracking interests, and elections
• Foreign affiliate dumping rules (if any).
• Financial information: Only unconsolidated statements are required when the reporting entity has an interest of 20% or more in the voting shares of another entity.
• Surplus account activity (full for CFAs)
• Number of employees, in bands
• Revenue divided by arm’s length, non-arm’s length sources
• FAP, FAC, and FACL: reported on a gross basis (before section 91(4) deduction).

The latter is what people fall for. If only one FAPI number has been reported or it is blank due to a deduction being made on Schedule 1, there is a mismatch with Schedule 1. The CRA takes note of this. 

The dormant affiliates receive some relief; you do not need a Supplement if:

• The total cost of the interest was under CAD $100,000, and
• The affiliate’s gross receipts are less than CAD $100,000, and assets are less than CAD $1,000,000. 

Still, even then, you will have to include the sleeping affiliate in the Summary. You simply skip the full Supplement. 

T1134 Pre-Filing Checklist: What to Confirm Before Submitting?

Please read through this before submitting your application: 

1. Have you identified all the foreign entities? Tag each one as FA, CFA, or out of scope. Don’t use face-value share count; use the real equity percentage. 

2. Is the deadline marked off separately from the T2? Ten months after the year-end. Allow additional recovery time for foreign affiliates who respond slowly. 

3. Is the year-end the same as the reporting entity? Not the affiliate’s. Make it clear early, particularly when the fiscal years don’t match up. 

4. Is the election setup set up correctly? Before using it, examine relationship, year-end, and currency rules. 

5. Is FAPI reported gross? Excluding section 91(4) deduction. Ensure that it matches up to Schedule 1. 

6. Are dormant affiliates handled correctly? Ensure the $100,000 cost threshold and dormancy tests are being met. Keep them in the Summary as well. 

7. Is every part of the filing complete? If one or more Supplements or sections are missing, then the CRA considers that it is not filed at all.

8. Is it amended correctly if this is an amendment? Amended electronic filings are filed electronically. Paper filings must be resent, with the word “AMENDED” or “CANCELLED” or “ADDITIONAL” marked on them. 

Wrapping Up 

T1134 is not just about filling out another CRA form.

The real work begins when CPAs must identify all foreign affiliates, understand the ownership structure, determine whether they are controlled or non-controlled, gather foreign financial information, and meet the filing deadline.

When completing the return, also consider dormant affiliates, indirect ownership and voting interests, and missing information under the current T1134 rules.

Therefore, the first step in a good T1134 process should be to examine the client’s corporate structure, not the form.

CPA firms with multiple international clients can benefit from a clear CPD document request, ownership review, and pre-filing checklist to better prepare and review the T1134.

For companies or CPA firms that require further assistance in preparing Canadian taxes and returns, Aone Outsourcing’s Canadian Tax Preparation Services can help you with tax preparation, review, compliance, and filing services for Canadian businesses. 

Frequently Asked Questions 

Q1: Can a T1134 filing be amended after it has been submitted?

Yes. You can amend it when previously reported information needs to be corrected, a supplement needs to be cancelled, or an omitted supplement needs to be added. Depending on how the original T1134 was filed, the amendment procedure will vary. 

Q2: What should a CPA do if a client cannot obtain the required information from a foreign affiliate? 

The CPA should document the steps taken to obtain the information and determine whether the CRA’s due-diligence exception applies. The unavailable information should be made public as necessary, and information received after that should be made public within 90 days. 

Q3: Does a change in ownership of a foreign affiliate during the year affect T1134 reporting? 

It can. The CPA should review ownership throughout the year, not just at year-end. Acquisitions, sales, share transfers, and reorganizations may affect the foreign affiliate analysis and the information reported on T1134. 

Q4: Can T1134 reporting become more complex when a Canadian company has indirect ownership of a foreign affiliate? 

Yes. You may need to examine direct and indirect ownership, voting control, organizational structure, and financial statement requirements in tiered structures. The CRA provides specific guidance for these situations.