T1134 filing requirement checker
Check whether a foreign affiliate return and supplement are required.
Open itPassive income earned inside a controlled foreign affiliate is taxed in Canada as it arises, with relief for the foreign tax grossed up by a factor. This runs the inclusion, the relief and whatever residual Canadian tax survives.
The controlled foreign affiliate
C$
The affiliate income that falls within the passive income definition, in Canadian dollars.
C$
The Act ignores an amount at or below a small figure. Confirm the current one for your year; five thousand dollars is the commonly cited figure.
%
The share of the affiliate income attributed to you.
C$
Tax applicable to the passive income, paid by the affiliate or withheld on it.
x
A gross-up factor defined in the Act. It differs for an individual and for a corporation, so confirm which applies to you rather than accepting the default.
%
Your own marginal or corporate rate on the net inclusion.
Residual Canadian tax
—
Effective Canadian rate on the passive income —
Below the de minimis figure —
Foreign tax covers the whole inclusion —
Passive income of the affiliate—
Your share, included in income—
Foreign tax grossed up by the factor—
Deduction allowed, capped at the inclusion—
Relief that cannot be used—
Net inclusion—
Canadian tax on it—
Passive income does not wait for a dividend
The rules exist to stop a Canadian resident parking investment income in a low-tax corporation abroad and deferring Canadian tax until it comes home. Where the foreign corporation is controlled, its passive income is attributed to the Canadian shareholder in the year it arises, whether or not anything is distributed. Active business income is outside the regime; passive income is not.
What counts as passive is wider than interest and dividends. Rent from property that is not an active business, royalties, certain gains, and income from a business that is deemed to be a property business rather than an active one can all fall in. Rental real estate held through a foreign company is the case that most often surprises people.
Relief is a grossed-up deduction, not a credit
Foreign tax paid on the passive income is not credited directly. Instead a deduction is allowed equal to the foreign tax multiplied by a factor defined in the Act, and that factor differs depending on whether the shareholder is an individual or a corporation. Where the grossed-up figure covers the whole inclusion, no residual Canadian tax arises; where the foreign rate is low, a residual survives.
Because the factor changes the answer completely, this calculator asks for it rather than supplying it. Enter the factor that applies to you, and note that the deduction is capped at the inclusion — excess relief is not refunded and is shown separately in the readout.
Worked example
A Canadian resident wholly owns a foreign company earning 150,000 dollars of rental and interest income, on which 12,000 of foreign tax is paid.
- The whole 150,000 is included in her income because she holds the entire participating interest.
- The 12,000 of foreign tax is grossed up by the factor she enters, giving the deduction.
- The net inclusion is taxed at her Canadian rate, and the residual is what the deferral was never going to avoid.
Raise the foreign tax until the grossed-up relief matches the inclusion and the residual Canadian tax disappears. That is the break-even the regime is designed around.
What this calculator assumes
- The relevant tax factor is an input, not an assertion. It is defined in the Act and differs between an individual and a corporation, and using the wrong one produces a badly wrong answer.
- The de minimis figure is also an input. Confirm the current one for your year rather than relying on the prefilled value.
- Whether income is passive or active business income is a substantive question this tool does not decide. It takes the amount you enter as passive.
- The later treatment when the affiliate actually distributes the income, and the basis adjustments that go with it, are outside this estimate.
An estimate, not advice. This is an estimate built from what you typed, not advice on your file. Nothing here reads your documents, checks your treaty article or looks at the year you are actually in. Where the number matters, we agree a fixed fee in writing before any work starts.
Where these figures come from
- current guidance Foreign affiliates and controlled foreign affiliates — CRA
- current text Income Tax Act — Justice Laws
- current folios Income Tax Folios — CRA technical guidance
Any figure prefilled in the panel above is stated with the year it belongs to and can be changed. Rates and thresholds move; a calculator that asks you for the current one stays right, and one that hides a guess does not.
Cross-border situations we are engaged for
Case study 1
A Foreign Subsidiary That Nobody Had Been Reporting
Owning a company abroad triggers an information return separate from the corporate return, with its own penalty. The work is the surplus and income computations behind it, which also determine how a future dividend is taxed on the way home.
Read how this one runs
Case study 2
A Canadian Landlord With Property in the United States
Gross withholding on US rents takes no account of mortgage interest, tax or repairs, so a leveraged property can face tax on turnover. An election onto net basis fixes that, and it has its own timing and its own filing.
Read how this one runs
Case study 3
Accounts Reported Late When the Income Already Was
Where the income was on the return and only the account report was missed, a narrow route allows late filing with a reason attached. It is open only while no income is unreported and no examination has begun, which is why it is checked first.
Read how this one runs
Case study 4
A Second Opinion on a Return Already Filed
A cross-border return prepared on one side only is usually right in isolation and wrong in combination. The review checks residence, source and relief in that order, and says plainly whether an amendment is worth making.
Read how this one runs
Case study 5
Two Passports, Two Returns, One Income
Dual citizenship does not let you choose which country taxes you. The work is establishing residence, applying the treaty article that governs each income type, and preparing both returns from one set of figures so they agree line for line.
Read how this one runs
Case study 6
One Salary, Two Countries Claiming It
A US citizen resident in Canada, taxed in full on both sides because each return was prepared without the other in view. Deciding which country has the first right to the income, then claiming relief on the second return in the right order, is what stops the same dollar being taxed twice.
Read how this one runs
Case study 7
A Clean History Used to Remove a First Penalty
An administrative waiver can remove a first failure where the filing and payment record supports it, and it is spent once used. Whether to claim it now or keep it for a heavier year is a judgement made with the whole file in view.
Read how this one runs
Case study 8
Tax Deducted When Buying From an NRI
Withholding on a sale by a non-resident is applied to the sale value rather than to the gain, so it routinely exceeds the tax due. A lower-deduction certificate obtained before completion avoids locking the difference up.
Read how this one runsAll case studies — every published engagement in one place.
Core International & Cross-Border Tax Services
International Tax Planning & Advisory
Strategy and compliance for income, assets and families spread across borders.
One coordinating team: filings on every side of the border are sequenced so treaty relief and foreign tax credits are claimed once — and in the right country.
U.S. & Cross-Border Tax Returns
Dual filers: U.S. citizens in Canada and Canadians with U.S. income run two parallel systems — we prepare both, in the right order, every year.
Expat & Emigration Tax
The move year is its own project: the elections and valuations filed that year decide the next decade of both countries’ returns.
Non-Resident Canadian Tax
Default withholding is 25% of gross: elective returns routinely turn over-withheld rent and pensions into refunds.
Transfer Pricing & BEPS
Documentation prepared with the return is the cheapest insurance in international tax; reconstructing it during an audit is the most expensive.
Tax Treaties & Withholding
Relief is only as good as the paperwork claiming it — we build treaty positions that survive review on both sides.
Cross-Border Estates & Trusts
Wills drafted for one country routinely misfire in the other — deemed disposition here, estate tax there, credits in between.
Global Investments & Reporting
Information returns carry the sharpest penalties — $25 a day whether or not any tax is owing. We keep them clean and on time.
Cross-Border Corporate Tax
Expansion raises the same four questions every time — entity, PE, repatriation, payroll. We answer them before the tax authorities do.
India Tax for NRIs & Returning Residents
The deduction is taken on the sale price, not the gain — which is why an NRI property sale strands cash unless the certificate is applied for before closing.
Canadian Tax with a Foreign Element
Residency is decided on facts, not on a form — and the year you arrive or leave is the one where the largest amounts turn on the smallest details.
UAE Tax for Expats & Their Home Country
A zero-tax country is only half the answer — the question that decides the bill is whether the country you came from still treats you as resident.
Industries & Client Types We Serve Worldwide
Global E-commerce & Marketplaces
Technology & SaaS
Professional Services Firms
Cross-Border Real Estate
Importers, Exporters & Manufacturers
Athletes, Artists & Entertainers
Remote Workers & Digital Nomads
Investment Funds & Holding Companies
Global E-commerce & Marketplaces
- Foreign VAT / GST / sales tax registrations
- Marketplace withholding reviews
- Inventory nexus & PE analysis
- Multi-currency books reconciled
Who We Serve:
Technology & SaaS
Software revenue crosses borders by default — sourcing rules, withholding on licence-like payments and IP location decide the effective rate.
Software revenue is rarely taxed where the team sits. Licence, subscription and service income are characterised differently by each side, and the answer decides withholding at source, treaty relief and whether a foreign customer creates a taxable presence at all — questions that are cheap to settle before the contract and expensive afterwards.
- Cross-border revenue sourcing & withholding
- IP structuring with real substance
- Equity for cross-border teams
- U.S. expansion: entity & PE setup
Who We Serve:
Professional Services Firms
- Reg 105 / 102 waivers
- Permanent establishment risk
- Partner mobility planning
- Cross-border withholding recovery
Who We Serve:
Cross-Border Real Estate
- Section 216 rental returns
- FIRPTA withholding recovery
- Section 116 clearance
- Treaty credit optimization
Who We Serve:
Importers, Exporters & Manufacturers
- Transfer pricing documentation (s.247)
- Customs value vs transfer price
- Foreign affiliate reporting (T1134)
- Country-by-country reporting
Who We Serve:
Athletes, Artists & Entertainers
- Reg 105 & U.S. CWA agreements
- Multi-state & country calendars
- Touring income allocation
- Royalty & image-rights withholding
Who We Serve:
Remote Workers & Digital Nomads
- Residency analysis before moving
- Employer payroll exposure
- Totalization & social security
- Foreign tax credits
Who We Serve:
Investment Funds & Holding Companies
- Treaty access & PPT reviews
- FAPI & surplus computations
- Withholding-efficient routing
- Governance & substance
Who We Serve:
