T1134: What is it and how to get through?
The T1134 Form is a necessary government document that is applicable for all stakeholders involved in a foreign affiliate, including individuals, companies as a whole, partnerships, etc. In simpler words, it is a mandatory form that needs to be filled out by any Canadian resident taxpayer who indirectly or directly holds a minimum of 10% of the shares of a non-resident or foreign corporation.
Eligibility of T1134
This T1134 form is applicable for all non-resident corporations even under the following situations as per a tax consultant in Toronto:
- They do not have the same tax year ending as the Canadian taxpayers
- The foreign affiliate is sold out before the tax year ends.
- The formation year of this foreign corporation is not yet applicable for taxation as it has not approached the taxing year-end as per the Canadian resident.
- The share ownership of the foreign affiliate by the Canadian resident is dropped off before the taxing year-end.
In case the Canadian resident who has active share ownership of the foreign affiliate does not comply with the government, he/she may be liable to pay penalties. However, this can be avoided under an exception of due diligence wherein the resident files all the available information with full transparency within a time bracket of 90 days.
Recent Amendments 2021
- The revised form of 2021 requires more in-depth information to be filled out before submission.
- The filing period is revised to be done within the first 10 months after the first tax year ending.
- If the gross earning of the foreign affiliate is less than a minimum of $100,000, the non-resident corporation can file itself as dormant and get a relief option. In order to qualify as an inactive Corporation, submission of the gross earnings in a receipt proving cost interest of less than $100,000 and proof of unavailability of assets exceeding the market value of approximately $1 million is a must.
- The penalty amount for the late filing of this form starts with a minimum of $25 a day and goes to a maximum amount of approximately $2500. Moreover, this amount is prone to change in case the CRA issues urgent T1134 filing.
Get Professional Help Here For T1134
In order to keep up with the changes of form T1134, Canadian taxpayers are advised to identify and highlight their transactions and record the same in the form along with keeping a constant update on the surplus. Thus, this can in turn be a lot to do, which can be discouraging and overwhelming for the Canadian residents. This is why reaching out to a Canadian Tax Consulting service like the one offered by The Tax and Accounting Company is recommended. They have a huge line of tax consultants in Toronto as well as international tax consultants to help with each and every query related to this form.
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