Is there a penalty for filing Schedule 25 late?
The schedule travels with the corporate return, so the first question is whether the return itself was late. Where it was, the late-filing penalty on the return applies: for the 2025 tax year, 5 per cent of the balance owing plus 1 per cent of that balance for each full month the return is late, to a maximum of twelve months. Where the return went in on time and the schedule did not, that percentage is not the mechanism in play. The exposure then comes from the foreign affiliate reporting the schedule leads into, which is charged by reference to the form and the delay rather than to the tax owing.
We filed the T2 without Schedule 25 — how do we fix it?
By amending, and by fixing the whole package at the same time rather than posting the missing schedule on its own. The schedule is the flag that leads to the full foreign affiliate reporting, so a late schedule almost always arrives alongside a question about whether that reporting was complete either. We establish the list of affiliates from the registers first, check what has already been filed against that list, and then correct everything that does not match it in one piece of work. Filing the schedule by itself tends to create a second inconsistency while curing the first.
Our foreign affiliate was dormant — does a late schedule still matter?
Yes. The schedule reports the interest held rather than the profit earned, so an affiliate that did nothing all year is still an affiliate that should have been named. Dormancy also does not help with the practical problem, which is that the schedule is the entry point to the affiliate reporting package. An affiliate left off for several years means several years in which the corporation's filings describe a group smaller than the real one. That is visible on its face once the holding is eventually reported, so a write-up of how the omission happened is worth preparing at the same time as the correction.
Will a late schedule trigger a review of our affiliate reporting?
Treat it as likely. The schedule exists to identify the foreign affiliates, so a corrected or belated one changes the picture the CRA has of the group, and the natural next question is whether the reporting that follows from it is complete. That is an argument for doing the work in the right order. We settle the list of affiliates, reconcile every filing that depends on it, and correct them together, so what arrives is a coherent group picture rather than one new fact sitting against filings that contradict it. A correction that raises more questions than it answers is worse than the omission it fixes.
We filed the affiliate reporting but missed the schedule — is that serious?
It is the inconsistency the CRA sees most easily, because the two are read against each other. Reporting an affiliate in one filing while the schedule that identifies affiliates never mentions it is a contradiction inside the same corporation's own return, and it does not need an audit to surface. The fix is the same in either direction: establish what the group actually holds, and make every filing that depends on that fact describe it identically. We would also record why the two came apart, because the usual cause is two people working from two lists, and that repeats itself until someone changes the process.
How many years of missing schedules should we correct at once?
All the open ones, prepared together. Correcting a single year produces a group picture the years either side contradict, which is the position the correction was meant to get out of. Working through the open years at once lets the holdings be described the same way throughout, with acquisitions and disposals appearing in the year they happened rather than wherever a particular schedule happened to notice them. It is also the only way to see the whole shape of the problem before deciding how to present it. We establish the affiliate list, rebuild each year against it, and file the corrections as one set.
What is OECD Pillar Two?
A global minimum effective tax for large multinational groups, delivered through top-up taxes rather than a single global rate. Where a group's effective rate in a jurisdiction falls below the agreed minimum, the shortfall is collected — by the parent jurisdiction under the income inclusion rule, by the source jurisdiction under a domestic top-up, or as a backstop by other jurisdictions. Canada has enacted implementing legislation. The compliance burden is data, long before it is tax. See BEPS and Pillar Two.
What is FAPI, and how does it differ from GILTI?
Canada's foreign accrual property income taxes a Canadian shareholder currently on the passive income of a controlled foreign affiliate — interest, rent, royalties, certain gains — with a deduction that recognises foreign tax already paid on it. GILTI comes at the problem from the opposite side: it targets active income above a return on tangible assets. A group with both a Canadian and a US shareholder can therefore be inside both regimes on different slices of the same profit. See GILTI against FAPI.
