Foreign affiliate reorganisations — can I handle this myself?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: liquidations, mergers and share exchanges each have their own treatment, and the reliefs are conditional and sometimes elective.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
What makes a foreign entity a foreign affiliate under Canadian rules?
A non-resident corporation becomes a foreign affiliate of a Canadian taxpayer once the taxpayer's direct and indirect equity interest in it crosses the relevant ownership thresholds set out in the Income Tax Act. Once that status applies, the corporation's surplus accounts and the character of amounts flowing back to Canada are tracked differently than for an ordinary foreign investment. We confirm affiliate status as a first step before any reorganisation is planned, since the label changes which rules apply.
Why do surplus accounts matter when reorganising a foreign affiliate?
Surplus accounts track how much of a foreign affiliate's earnings can flow back to a Canadian parent with favourable tax treatment versus how much is taxed more heavily on repatriation. A reorganisation, share exchange, or amalgamation involving the affiliate can shift amounts between surplus pools, sometimes converting previously favourable surplus into a less favourable category. We trace the surplus impact of a proposed reorganisation before it happens, not after the return is filed.
Does a foreign affiliate keep its status after a reorganisation?
Not automatically. A share exchange, merger, or change in the ownership chain above a foreign affiliate can alter or end its affiliate status, which in turn changes how its income and any amounts paid to Canada are taxed going forward. Some reorganisations are structured specifically to preserve continuity of status and surplus history; others break it without anyone intending to. We test a proposed structure against the affiliate rules before it is implemented.
What is a foreign trust for US tax purposes?
A trust that is not a domestic trust — broadly, one that fails the tests looking at whether a US court can exercise primary supervision and whether US persons control the substantial decisions. The classification decides everything downstream: whether the settlor is taxed on the income as owner, how distributions to US beneficiaries are taxed, and which annual information returns are due. Many ordinary foreign arrangements, including some pension and education savings vehicles, land inside the definition. See Form 3520-A.
Does GILTI apply to individuals?
Yes, and it lands harder on them. An individual US shareholder of a controlled foreign corporation has the same inclusion a corporate shareholder does, but without an election gets neither the corporate-level deduction nor credit for the foreign corporate tax already paid — so foreign profit can be taxed at individual rates with no relief for tax the company paid abroad. An election to be taxed as though through a domestic corporation is usually the first thing to model. See Form 5471 and CFCs.
