Form T1134: What Canadians With Foreign Corporations Need to Know
If you live in Canada and own shares of a company outside Canada, the CRA probably expects a Form T1134 from you every year, even if that company paid you nothing. A US LLC, a holding company in Dubai or a family business in India can all trigger it.
We see many clients who have never heard of this form until a penalty letter arrives. This post explains in plain language what T1134 is, who has to file it, and how to stay out of trouble.
What is Form T1134?
T1134 is an information return. It does not calculate any tax. Instead, it tells the CRA which foreign companies you have a significant stake in, how they are owned, what they earn and whether money moved between you and them.
The CRA uses this information to check that income earned offshore is taxed properly in Canada. This matters most for passive income such as interest, rent and royalties, which can be taxable in your hands even if the foreign company keeps the cash. The return also helps the CRA spot loans and transfers that should have been reported elsewhere.
Who has to file?
You must file T1134 if you are a Canadian resident (an individual, a corporation, a trust or a partnership) and at any time in the year you had a foreign affiliate.
In simple terms, a non-resident company is your foreign affiliate when both of these are true:
You own at least 1% of its shares directly or indirectly.
You and people related to you together own at least 10% of any class of its shares.
If you or a small group of Canadians actually control the company, it becomes a controlled foreign affiliate. A controlled foreign affiliate needs much more detail on the form, including its revenue by type and its passive income.
A common example: the US LLC. Many Canadians set up a US LLC to run a franchise, a rental property or an online store. For US tax purposes, a single-member LLC is often ignored. For Canadian tax purposes, however, the CRA treats a US LLC as a corporation. If you own one, it is very likely a controlled foreign affiliate, and a T1134 is needed. If the LLC sits under a US holding corporation, the holding company and every LLC under it are all your foreign affiliates, and each one may need its own supplement.
US disregarded LLCs: a corporation in Canada's eyes
In the US, a single-member LLC is usually a "disregarded entity". The IRS ignores it and taxes its profit directly to the owner, or to the parent company if a US corporation owns it. Many owners therefore assume Canada will ignore it too. It does not.
Canada looks at what the entity is under the law where it was formed, not at how the IRS taxes it. An LLC is a separate legal person, can own property in its own name and protects its members from its debts. Those are the features of a corporation, so the CRA treats every US LLC as a corporation for Canadian tax purposes, including T1134. Your membership interest is treated like shares, and an LLC you own or control is your foreign affiliate.
This mismatch has real consequences:
Reporting. The LLC needs its own T1134 supplement and its own financial statements, even though it does not file a separate US return.
Timing of income. The US taxes you on the LLC's profit every year. Canada generally taxes you only when the LLC distributes money to you, which Canada treats as a dividend, unless the income is passive.
Double tax risk. Because the two countries tax the same profit at different times, US tax paid may not line up with Canadian tax owing in the same year. Your foreign tax credit can then fall short.
If you hold a US business through an LLC, or are about to set one up, get advice on the structure early. A different structure may avoid the double tax problem altogether.
The "dormant affiliate" exception
You can skip a full supplement for a small, inactive company if all three of these conditions are met:
Test | Limit |
Your total cost of your interest in that affiliate | Under C$100,000 at all times in the year |
The affiliate's gross receipts, including sale proceeds | Under C$100,000 for the year |
The affiliate's total assets at fair market value | Never more than C$1,000,000 in the year |
The tests apply in Canadian dollars, even if the company keeps its books in another currency. A dormant affiliate still has to be listed on the summary; you just do not complete a full supplement for it. A company that runs an active business with real sales will usually fail the gross receipts test.
What the form asks for
T1134 has two parts.
The summary. This identifies you, lists every foreign affiliate you had in the year, shows how they are owned (who owns whom, and by what percentage), and lists any dormant affiliates. You can attach an organizational chart instead of filling in some of the ownership tables.
A supplement for each non-dormant affiliate. Each supplement covers:
the company's name, address, foreign tax number, main activity (NAICS code) and country;
who owns its shares, and your cost of those shares;
loans between you and the company at year-end;
dividends paid and any reorganizations or share transactions;
for controlled affiliates, the number of employees, its gross revenue by source and whether it earned passive income (called FAPI).
Financial statements are now required. For a controlled foreign affiliate, or one where you hold at least 20% of the votes, you must include its unconsolidated financial statements and notes. A consolidated US Form 1120 for the whole group does not meet this requirement. Each company needs its own balance sheet and income statement.
Deadline and penalties
T1134 is due 10 months after the end of your taxation year. For individuals, the year ends on December 31, so the 2025 return is due by October 31, 2026. A corporation with a March 31 year-end has until January 31 of the following year.
The penalties are heavy because the form carries no tax:
Situation | Penalty |
Filed late | C$25 per day, minimum C$100, up to C$2,500 per return |
Late knowingly or through gross negligence | C$500 per month, up to 24 months (C$1,000 per month if the CRA has sent a demand to file) |
Still not filed after 24 months | An additional penalty of 5% of your cost of the foreign affiliate, less the penalties above |
False statement or omission | A separate penalty, also based on the amount involved |
There is also a hidden cost. If T1134 is filed late, the CRA gets three extra years to reassess your tax return for that year.
How to file
T1134 is filed separately from your income tax return. You have two options.
Electronically. Corporations, partnerships and individuals can file T1134 through certified tax software. You get a confirmation number immediately. Financial statements are then uploaded as separate electronic documents and linked to that confirmation.
On paper. Mail the signed summary and supplements, with the financial statements, to the address printed on the form (currently the Winnipeg Taxation Centre). Keep proof of mailing.
One practical tip: software checks for electronic filing are strict and sometimes demand entries the paper form allows you to leave blank. Start early so a software error does not push you past the deadline.
Common mistakes we see
Thinking a US LLC is "not a company". It is a corporation for Canadian tax purposes, even if the IRS ignores it.
Reporting only the top company. Every company in the chain below it is also your foreign affiliate and may need its own supplement.
Sending consolidated statements. The CRA wants separate statements for each affiliate.
Mixing up T1134 and T1135. T1135 is for foreign investments such as bank accounts and shares of companies you do not control. Shares of your foreign affiliate are reported on T1134, not T1135.
Forgetting loans. Money you lent to the foreign company, or borrowed from it, must be shown. Loans from the company to you can also have their own tax consequences.
Assuming no income means no filing. A start-up or a company with losses still needs a T1134 unless it meets every dormant test.
Ignoring passive income. If the company earns interest, rent or royalties, part of that income may have to be included in your Canadian income each year, whether or not it is paid to you.
Missed a year? Fix it before the CRA finds it
If you should have filed T1134 in earlier years and did not, act before the CRA contacts you. The CRA's Voluntary Disclosures Program was updated in October 2025. Under the new rules, an application made before the CRA has contacted you can qualify for substantial relief from penalties, and partial relief from interest where tax is also owed.
To qualify, the disclosure must be voluntary and complete: all missing years and all affiliates, with supporting statements. Once the CRA has written to you about the issue, the relief available drops sharply. If penalties have already been charged, you may still ask for relief under the CRA's taxpayer relief provisions, but that relief is at the CRA's discretion.
How we can help
At Manu Bhai CPA Professional Corporation, we prepare T1134 returns for individuals and corporations with companies outside Canada. We can:
confirm whether you need to file, and for which companies;
prepare an ownership chart for your group;
prepare the summary and every supplement, and file them electronically;
organize the financial statements the CRA requires;
prepare voluntary disclosures for missed years.
If you own any part of a company outside Canada, contact us at 825-513-3951, or visit our office at 4838 Richard Rd SW, Suite 300, Calgary, AB T3E 6L1 We are happy to review your situation before the next deadline.
This article is general information and is not tax advice for your situation. Tax rules change, so please speak with us before acting on it.
Comments