I own a small company overseas, do I have to file T1134?
Possibly. The form is not limited to corporate groups. A Canadian resident individual with an interest in a foreign affiliate at the ownership level the rules describe is a filer in the same way a company would be. The size of the business is not the test, and neither is whether it sent you any money. Start with the shareholding and the rules on what makes a foreign company an affiliate, and only then look at what the reporting package requires. Most people who meet this form late meet it the other way round.
Does an individual file T1134 or only corporations?
Individuals file. So do trusts and corporations. The information return covers a Canadian resident's foreign affiliates, with financial and ownership detail on each one, and the rules reach an individual holding shares personally just as they reach a Canadian parent holding a subsidiary. This is a common misunderstanding about the form. It is usually prepared for groups, so it reads as a group obligation, and a founder holding one overseas company in their own name assumes it cannot apply to them.
My foreign company is dormant, is a T1134 still needed?
A company that traded nothing in the year still has to be tested against the ownership rules, because the obligation follows the interest rather than the activity. What the level of activity can affect is how much reporting is required, since the package scales with control and with the circumstances the rules set out. So the answer is not reached by opening the accounts and seeing nothing in them. Establish the ownership position first, then work out which reporting applies, and record the reasoning for the year in case it is asked about later.
What does T1134 ask for that my foreign accounts do not show?
The parts that catch people out are the surplus and income-classification questions. Foreign financial statements are prepared to answer a different question, in a different framework, for a different regulator, and they do not carry the Canadian characterisation the form is asking for. So the work is a restatement exercise rather than a transcription. Income has to be classified as the rules classify it, and surplus balances have to be tracked over time rather than read off a single year's accounts. Budget for that, because it is where the time goes.
Is Form T1134 the same as T1135?
No, and both can be due in the same year. T1135 reports specified foreign property held by a Canadian resident, measured on cost against a reporting threshold. T1134 is the information return for a Canadian resident's foreign affiliates, carrying financial and ownership detail on each affiliate. One asks what you hold abroad. The other asks about companies you have an interest in and what happened inside them. Filing one does not answer the other, and a shareholding in an overseas company is exactly the fact pattern in which the two questions arrive together.
I moved to Canada and kept my company abroad. What now?
Treat the shareholding as a Canadian reporting question from the point residence began, not as an overseas matter that stayed behind. The founder who kept an operating company after moving is the classic late discovery on this form, usually because nothing changed in the company itself and no money came out. Two pieces of work follow: establishing whether the company is a foreign affiliate at the ownership level the rules describe, and finding out whether its accounts can answer the surplus and classification questions. The second usually takes longer than expected.
How is a US LLC taxed for a Canadian owner?
This is the classic hybrid mismatch. The United States generally treats a single-member LLC as transparent and taxes the member on the profit as it arises. Canada treats the LLC as a corporation and taxes the member on distributions. So the two countries tax different amounts in different years, and the foreign tax credit — which needs the same income taxed by both in the same year — often cannot bridge it. The treaty relief for hybrids is narrow. See why a Canadian should rarely own an LLC.
Branch or subsidiary — which should we use to expand?
A branch keeps one taxpayer: results consolidate at home, losses are usable sooner, and the exposure is that the branch is a permanent establishment whose profit the host country taxes, sometimes with a branch tax on repatriation. A subsidiary is a separate taxpayer with limited liability and local rates, at the cost of withholding on dividends home and transfer pricing on everything between them. The deciding facts are usually expected losses, liability and exit plans. See branch against subsidiary.
