Principal Issues: See Q&A
Position: See Q&A
Reasons: See Q&A
LEGISLATIVE REFERENCE: 233.4
CLHIA ROUNDTABLE - MAY 2009
Question #9
T1134 Form
Section 233.4 stipulates what is a "reporting entity" for purposes of foreign affiliate reporting. Paragraph 233.4(2)(a) modifies "equity percentage" for this purpose to ensure that a non-resident is to be reported only by the lowest-tier Canadian corporation within a related group. However, to the extent that more than one Canadian taxpayer in a related group has a direct equity percentage of at least 1% in a foreign affiliate, there can be duplicate T1134 filings in respect of the same foreign affiliate.
Our experience has shown that information reported on the two or more T1134 forms in respect of a single foreign affiliate is generally the same, with the exception of certain information including the Canadian entity name, its participating percentage, its qualifying interest, surplus accounts, and disclosure of dividends and reorganization information.
Question
To simplify the reporting requirements imposed on Canadian taxpayers in connection with their foreign affiliates, would the CRA consider revising the T1134 form to allow multiple reporting by related taxpayers on one common form? Alternatively, does the CRA have another suggestion to simplify the reporting requirements?
CRA Response
Thank-you for your suggestion in regards to the revision of the T1134 form. CRA revises and updates forms periodically to reflect changes to the legislation, to improve effectiveness and increase efficiency. Your suggestion will be considered in our future review of the T1134 form.
Our current policy is that an information return must be filed for each foreign affiliate (non-resident corporation or non-resident trust) of the taxpayer or partnership that is either a controlled foreign affiliate or a non-controlled foreign affiliate.
However, if it's a situation where there is duplication of information in the forms filed, taxpayers may discuss the possibility of reducing the number of forms filed with the TSO staff serving their region. Administrative relief for filing the returns may be granted under the authority of subsection 220(2.1) of the ITA. Each situation is considered on a case-by-case basis. The TSO may grant relief if satisfied that all the necessary information will still be reported.
2009-031672
Alison Campbell
May 1, 2009