I own a company abroad — do I have to file T1134?
If you are resident in Canada and hold an interest in a foreign corporation that is a foreign affiliate of yours, the reporting return is yours to file, whether or not the company paid you anything and whether or not it made a profit. That is the part clients miss: the obligation attaches to the holding, not to a distribution. A dormant company abroad, still registered and still holding an asset, can carry a filing requirement for every year of its dormancy. The first work on any of these files is establishing, year by year, whether the interest met the affiliate test at all.
How far back do I need to reconstruct the company's accounts?
As far back as the affiliate interest existed and the return was due. This is the real work on a late affiliate filing and the reason it takes longer than clients expect. The form calls for the affiliate's financial information on a prescribed basis, so local statements, where they exist, have to be restated, and where they do not exist the figures are built from bank records, ledgers and filings made in the company's own country. Accounts prepared to a local standard are a starting point, not an answer. The reconstruction is what the whole package stands on.
Is there a penalty if the foreign company made no money?
Yes. The reporting penalty is tied to the failure to file the return, not to income, so a loss-making or dormant affiliate carries the same filing requirement as a profitable one. The structure of that penalty was designed with corporate groups in mind, which is why it lands so heavily on an individual who owns one modest company abroad. Where a long gap exists, the exposure can be substantial with no tax behind it at all, and that is precisely the pattern the disclosure routes were built to deal with.
Do I file T1134 separately from my own tax return?
It is a separate return with its own deadline, and that is one reason it goes missing: a client whose personal or corporate return was filed on time assumes everything due was filed. When catching up, the affiliate returns are not prepared in isolation either. What is reported about the affiliate has to agree with the schedules in the corporate filings alongside them — the same surplus figures, the same share counts, the same currency translation. Two filings about one company that disagree will be reconciled by somebody, and it is better that it is you.
What if my foreign company has no proper financial statements?
That is common and it is workable, but it changes the shape of the engagement. Where no statements were prepared, the affiliate's position is rebuilt from primary records: bank statements, invoices, loan documents, share registers and any filings made locally. The rebuilt figures are then carried on to the required reporting basis consistently across every year, because a set of returns in which the basis shifts part-way through invites a question about all of them. The reconstruction is documented as it is done, so the package can show how each figure was arrived at.
Can I get penalty relief for late T1134 filings?
Relief follows the disclosure route rather than being applied for on its own, so the route decision comes before any filing. It depends on what else was left out: whether income from the affiliate was reported, whether the corporate returns behind it are complete, and whether an enquiry has already been raised. Once the route is settled, the returns for every outstanding year go in together with one explanation of how the requirement came to be missed. Filing a single year to test the water is what removes the option of doing it in one package.
Is moving money between my own accounts in two countries taxable?
Moving your own capital between your own accounts is not itself income, so the transfer is not what creates tax. What can create tax or reporting is the income the money earned before it moved, a foreign-exchange gain on certain holdings, and the reporting obligations the balances themselves trigger — foreign account and asset reports keyed to balances rather than income. Remittances out of some countries also need certification before the bank will send them. See foreign account reporting.
Why should a Canadian rarely own a US LLC?
Because the two systems classify it differently. The United States generally treats a single-member LLC as transparent while Canada treats it as a corporation, so the income is taxed in different hands in each country and the foreign tax credit does not line up. The result is tax paid twice with no relief to claim. Other structures reach the same commercial outcome without the mismatch. See why a Canadian should rarely own an LLC.
