Section 116 holdback calculator
Work out the section 116 holdback and what a clearance certificate frees.
Open itA Canadian taxpayer with an interest in a foreign corporation or trust may owe a foreign affiliate information return, with a supplement for each affiliate. This tests the dormant relief on the current thresholds and says what has to be filed.
The affiliate
The definition turns on equity percentages held by you and by related persons. If you are unsure, treat it as met and check the definition separately.
C$
Including proceeds of disposition of property, not just revenue.
C$
Tested at any time during the year, not at year end.
C$
To the reporting entity, at any time in the year.
C$
One hundred thousand dollars for tax years beginning after 2020. The earlier figure was much lower.
C$
One million dollars of total fair market value at any time in the year.
C$
One hundred thousand dollars of cost amount of the interest.
What has to be filed
—
Dormant relief failed on —
Information return —
Supplement for this affiliate —
Dormant or inactive on the thresholds —
Headroom below the receipts threshold—
Headroom below the asset threshold—
Headroom below the supplement cost threshold—
The return, the supplement and the dormant relief
The obligation has two layers. The information return itself is filed by the reporting Canadian entity. A supplement is then completed for each foreign affiliate, and that is where the detail sits — the financial information, the surplus balances, the income by category and the disposition data.
The dormant relief removes the supplement, not the return. An affiliate qualifies as dormant or inactive where its gross receipts for the year are below the receipts threshold and the total fair market value of its assets never exceeded the asset threshold during the year. Where it is dormant and the cost amount of your interest in it is also below the cost threshold, no supplement is completed for that affiliate.
Two traps in the thresholds themselves
First, the receipts threshold was raised for tax years beginning after 2020, and the earlier figure was very much lower. Filing an older year on the newer threshold is a real error, so the field is editable and the year matters.
Second, gross receipts include proceeds of disposition of property, not just revenue. A holding company with no trading activity that sold one asset during the year can be well over the threshold on a single transaction, and people miss it because they think of the entity as dormant in the ordinary sense of the word. Similarly, the asset test looks at the highest value at any time in the year, not the balance sheet at year end.
Worked example
A Canadian resident owns a wholly-owned company in Dubai. It received 60,000 dollars during the year, its assets peaked at 800,000, and the cost amount of the shares to her is 90,000.
- Receipts are under the threshold and assets never passed the asset threshold, so the affiliate is dormant on both limbs.
- The cost amount of her interest is under the supplement threshold too, so no supplement is completed for it.
- The information return itself is still filed. Dormant relief removes the detail, not the filing.
Add a single property sale that pushes receipts over the threshold and the affiliate stops being dormant immediately, supplement and all. Receipts include proceeds of disposition, which is exactly how that happens.
What this calculator assumes
- The dormant thresholds prefilled here are the current ones for tax years beginning after 2020 and are cited below. All three are editable, because the receipts figure was much lower for earlier years.
- Whether the entity is a foreign affiliate at all is a definitional question about equity percentages held by you and by related persons. This tool takes your answer rather than deciding it.
- The filing deadline is not modelled. It has changed for recent tax years, so confirm the current date for your year end rather than assuming last year's.
- A controlled foreign affiliate carries additional consequences, including the passive income inclusion. That is a separate calculation.
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 Information returns relating to foreign affiliates — CRA
- current guidance Foreign reporting — CRA
- current form Form T1134 — CRA forms
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.
Files that look like this one
Case study 1
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 2
A Margin Defended With a Benchmarking Set That Fits the Facts
A comparables set is only as good as the screening behind it, and a rejected set takes the margin with it. The study selects the tested party first, screens on function rather than on industry code, and records why each comparable survived.
Read how this one runs
Case study 3
Whether the Year Made Someone an NRI
Indian residence is decided by presence tests applied to the financial year, and a single trip can change the answer for the whole of it. The status is established before any return or exemption is considered.
Read how this one runs
Case study 4
The Local File That Has to Match the Accounts
A local file describes the entity's own controlled transactions and ties them to its statutory figures. Where the two do not reconcile, that is what an examiner opens with.
Read how this one runs
Case study 5
A Shareholder Loan Across a Border at No Interest
An interest-free loan between related companies is priced as if it carried interest, and in some cases a deemed benefit follows as well. The file sets a rate against the borrower's own credit profile and documents the terms that support it.
Read how this one runs
Case study 6
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 7
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 8
One Employee Working From Another Country
A single remote employee can create payroll registration, withholding and social security obligations in their country, and sometimes a corporate presence too. The review sets out each obligation and the order they have to be registered in.
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
- 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
Working from anywhere doesn't mean taxed nowhere: residency defaults, employer payroll exposure and treaty relief decide where income actually lands.
Working from another country does not by itself end tax residence in the one you left, and it can start one where you are sitting. Day counts, ties, the employer's own exposure and the treaty tie-breaker all point at the same question, and the year you move is the year it has to be answered on paper.
- 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:
