Do we need a separate T1134 supplement for each foreign company?
Yes. The supplement is per-affiliate: one set of schedules for each foreign entity in the group, not one set covering the group. So a filer of the foreign affiliate return with several affiliates prepares several supplements, each carrying that entity's own figures. This is why the work scales with the number of entities rather than with revenue — a group of small dormant affiliates can take more work than one substantial trading company. It is also why the entity list needs settling at the start. Finding another affiliate late in the process adds a whole schedule set, not a line to an existing one.
Can we use our consolidated accounts to complete Form T1134?
No. Consolidated group accounts do not satisfy the supplement, because the schedules ask about each affiliate separately: its own figures, in its own currency, with its own classification of income. Consolidation removes precisely what the form wants to see, since intercompany balances and charges have been eliminated and the entities merged into one set of numbers. In practice the first task on this kind of engagement is unwinding the consolidation back to entity-level trial balances, or obtaining them from the local bookkeepers. Groups that keep entity accounts as a matter of routine find this reporting considerably cheaper to produce.
Do affiliates held under another affiliate need their own supplement?
Yes. The supplement is required by filers with more than one affiliate and by groups where affiliates sit under one another, so a second or third tier is reported as well as the entities held directly. Tiered structures are where affiliates get missed, because a group's reporting habits tend to follow its direct holdings. The practical safeguard is to work from a full ownership chart rather than from the list of companies the Canadian entity pays or receives money from. An entity can be an affiliate that must be reported without ever having dealt with Canada at all.
Does a dormant foreign affiliate still need its own supplement?
Reporting is decided by the facts of ownership rather than by whether the affiliate did anything, so a quiet year does not remove it and a nil position is still a position that gets reported. Dormant entities are the ones most commonly missed, and the reason is understandable: nobody is preparing accounts for them, so they generate no paperwork to remind anyone they exist. It is usually cheaper to keep a minimal set of records for a dormant affiliate each year than to reconstruct several years of nothing later, which is a surprisingly slow exercise.
What currency do we report a foreign affiliate in?
Each affiliate is reported on its own, in its own currency, with its own classification of income — the schedules are built entity by entity rather than translated into a single group currency. Two consequences follow. The classification of an affiliate's income for these purposes is a Canadian question, so the labels used in the local statutory accounts cannot simply be carried across; the same receipt can sit in a different category here than it does there. And each entity's figures have to reconcile to its own books, which is why entity-level trial balances matter more than the group consolidation.
Why does adding one foreign subsidiary add so much reporting work?
Because the unit of work is the entity, not the group. Every affiliate brings its own set of schedules, its own currency and its own classification of income, so a new entity adds a complete supplement rather than a line on an existing one. Revenue barely affects it: a holding company with a single asset can take as long as a trading company several times its size. Groups that restructure with this in mind — collapsing dormant entities, avoiding tiers that serve no purpose — reduce their annual reporting permanently. The fee for the work is agreed in writing before it starts.
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.
Which business structure has double taxation?
The corporation — specifically a US C corporation, where profit is taxed to the company and the dividend again to the shareholder. Sole proprietorships, partnerships and LLCs treated as flow-throughs are taxed once, in the owners' hands. Across borders that tidy answer breaks: an entity treated as a flow-through in one country can be opaque in the other, which produces a mismatch neither system planned for. See LLC against corporation for Canadians.
