Do I need to file a T1134 for my US company?

Probably, if you’re resident in Canada and the company is a foreign affiliate. That test is lower than people expect. You need an equity percentage of at least 1 percent yourself, and at least 10 percent once your relatives’ holdings are counted alongside yours. The return is due 10 months after the year end, which is a different date from your own return.

What makes my US company a foreign affiliate?

Two equity tests, and both have to be met at the same time. The first is about you alone and it’s set at 1 percent. The second widens the count to include everyone related to you and is set at 10 percent. Neither is about control, which is why people who own a slice of a family business are surprised to find themselves inside the definition.

“foreign affiliate, at any time, of a taxpayer resident in Canada means a non-resident corporation in which, at that time, (a) the taxpayer’s equity percentage is not less than 1%, and (b) the total of the equity percentages in the corporation of the taxpayer and of each person related to the taxpayer … is not less than 10%” ITA 95(1)

Your own equity percentage	You plus related persons	Foreign affiliate?
Under 1%	Any amount	No, test (a) fails
1% or more	Under 10%	No, test (b) fails
1% or more	10% or more	Yes, both tests met
100%	100%	Yes, and it is also a controlled foreign affiliate

Note what the second row means in practice. Owning 5 percent of a US company where nobody related to you holds anything leaves you outside the definition. Owning the same 5 percent where your brother holds another 6 puts you inside it, and your filing obligation turns on his holding rather than on any change in yours.

When is it due?

Ten months after the end of the year, and that is its own deadline rather than your return’s. The statute sets it directly, and it runs from the reporting entity’s taxation year or fiscal period rather than from the foreign company’s year. For an individual on a calendar year, that means the end of October following the year in question.

“A reporting entity for a taxation year or fiscal period shall file with the Minister for the year or period a return in prescribed form in respect of each foreign affiliate of the entity in the year or period within 10 months after the end of the year or period.” ITA 233.4(4)

The separation matters because people file their Canadian return in April, consider the year closed, and then miss a return that was never due in April in the first place. It also means the T1134 deadline is not extended by anything that extends your personal filing.

Who exactly counts as a reporting entity?

A Canadian-resident taxpayer that has a foreign affiliate at any point in the year. The statute frames it as three limbs covering a non-resident corporation, a non-resident trust, and partnerships, and it carves out taxpayers whose income is entirely exempt from Part I tax. The phrase to notice is “at any time in the year”, because an affiliate you disposed of in March still generates a filing obligation for that year.

“reporting entity for a taxation year or fiscal period means (a) a taxpayer resident in Canada (other than a taxpayer all of whose taxable income for the year is exempt from tax under Part I) of which a non-resident corporation is a foreign affiliate at any time in the year” ITA 233.4(1)

What is the penalty for filing late?

It’s a daily penalty with a floor and a ceiling, and the ceiling is reached in a little over three months. The general information-return penalty applies where no more specific provision does: the greater of $100, or $25 for each day the failure continues up to a maximum of 100 days.

“to a penalty equal to the greater of $100 and the product obtained when $25 is multiplied by the number of days, not exceeding 100, during which the failure continues.” ITA 162(7)

• What happens to a Canadian corporation when you move to the US, the mirror-direction question
• Whether you need Form 5471 for a Canadian corporation, the US analogue of this filing
• Why a US LLC is usually a trap for a Canadian resident

So the exposure caps at $2,500 per failure under that subsection. Heavier penalties sit elsewhere in section 162 for failures involving knowledge or gross negligence, which is a different provision from the one quoted here and turns on conduct rather than on time.

What should I do next?

Work out two percentages before anything else: your own equity percentage, and the total once every related person’s holding is added to it. If the first clears 1 percent and the second clears 10, put the October date in your calendar now rather than treating it as part of your April filing. If you’re close to either line, the holdings of relatives are worth confirming rather than assuming.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.