New Tax Return Deadline Around Foreign Affiliates in Place

Canadian resident taxpayers with interests in non-resident corporations, known as foreign affiliates, should be preparing to file tax returns under slightly tighter deadlines.

The original filing deadline for form T1134, “Information Return Relating to Controlled and Not-Controlled Foreign Affiliates” has been shortened to 12 months from 15 months following the taxpayer’s year-end. The 2018 federal budget had proposed to shorten this deadline to six months, to align with a taxpayer’s income tax return filing deadline.

The purpose of this filing is to report certain information about a taxpayer’s foreign affiliates and controlled foreign affiliates; in the case of controlled foreign affiliates, the taxpayer must include all foreign affiliate property income (FAPI), which is passive income such as interest, dividends, rents and royalties.

However, the proposed deadline represented a significant challenge to taxpayers, especially large multi-national groups, as the process of gathering the required information from multiple jurisdictions with differing tax filing deadlines can be complicated and onerous. Foreign affiliates will be reporting based on the deadlines in their jurisdictions; they won’t necessarily have the required information available to meet Canadian deadlines.

In October 2018, a Notice of Ways and Means Motion was released that extended the proposed 6-month deadline to 12 months for taxation years beginning after 2019 and 10 months for taxation years beginning after 2020.

Extending the deadline from 6 months to 10 months essentially aligns the Canadian filing deadline with the October 15^th extended filing deadline for U.S. corporate returns. There may still be challenges with respect to obtaining the required information from other jurisdictions; however, this extension did work to ease the burden.

How MNP Can Help

Our tax advisors have the specialized knowledge required to analyze your situation and determine if you have T1134 filing requirements. We can help gather information and prepare the returns, as well as ensure your ongoing compliance within the tax systems in other jurisdictions.

For more information, contact an MNP Tax Specialist in your region or visit MNP.ca.