CROSS-BORDER

Own part of a company outside Canada? There are two separate forms, not one.

T1134 and T1135 get triggered by completely different things, run on completely different deadlines, and CRA fines each one separately. Mixing them up is the single most common mistake.

Canadian residents — individuals, corporations, trusts, and partnerships alike — who own things outside Canada face two distinct, commonly confused reporting obligations. You can owe one, the other, both, or neither, for the exact same foreign holding, depending on what it is and how much of it you own.

T1134 vs. T1135, side by side

T1134

Triggered byOwning an equity interest in a non-resident corporation that qualifies as a "foreign affiliate" — generally at least 1% direct ownership, and at least 10% total ownership counting related persons.
ThresholdOwnership percentage, not dollar value. A small foreign affiliate can still trigger it.
Deadline10 months after the end of the relevant tax year — its own separate deadline.
Filed byEvery reporting entity, with one supplement per foreign affiliate.

T1135

Triggered byTotal cost of all "specified foreign property" combined — foreign bank accounts, foreign stocks, foreign rental property, foreign affiliate shares — exceeding $100,000 CAD.
ThresholdDollar cost amount, not ownership percentage. A tiny stake still counts toward the total.
DeadlineSame day as your regular income tax return — no separate deadline of its own.
Filed byAnyone crossing the $100,000 threshold, as one consolidated statement.
Why people get caught by both, or think they're covered by neither: a foreign affiliate's shares count toward the T1135 $100,000 threshold too, so the same holding can trigger both forms at once. Just as often, someone files T1135 because their foreign brokerage account crossed $100,000 and assumes that's the whole obligation — never realizing a modest equity stake in a foreign operating company, worth far less than $100,000, separately triggered T1134 on its own percentage-ownership test.

Dormant foreign affiliates still generally have to file

A common assumption is that an inactive shell company abroad doesn't need reporting. For tax years beginning after 2020, a foreign affiliate only qualifies for the simplified "dormant or inactive" exemption from the T1134 supplement if it had gross receipts under $100,000 for the year and its assets never had a fair market value above $1,000,000 at any point in the year — tested entity by entity. Fail either test, even for a foreign affiliate doing essentially nothing, and the full supplement is still required.

Penalties are per affiliate, not per return

T1134's base late-filing penalty is $25 a day, minimum $100, maximum $2,500 — and it applies separately to each foreign affiliate supplement, not once to the return as a whole. Someone with five foreign affiliates who misses the deadline entirely is looking at up to five times that maximum, not one. It escalates from there:

T1135 carries the same base structure — $25/day, $100 minimum, $2,500 maximum, with the same escalation tiers for gross negligence and a CRA demand to file — but since it's one consolidated statement rather than one form per holding, it doesn't multiply the way T1134's per-supplement penalty does.

FAPI: why "it's still in the foreign company" doesn't defer the tax

If a foreign affiliate is a controlled foreign affiliate — generally, Canadian residents control it, most commonly by owning more than 50% of its shares — its passive income (interest, dividends, rents, royalties, and similar) is taxed back to the Canadian shareholder as it's earned, under the Foreign Accrual Property Income (FAPI) rules, whether or not a dividend was ever actually paid out. This exists specifically to stop passive investment income from parking indefinitely offshore. Active business income earned by a foreign affiliate is treated differently — generally not taxed in Canada until it's actually repatriated as a dividend, at which point Canada's tax treaty with that country typically determines how much of it comes back exempt versus taxable.

Treaty withholding, worked with the Canada-US treaty

Canada's default domestic withholding tax on dividends paid to a non-resident is 25%. Tax treaties cut that substantially — under the Canada-US treaty, a US corporate parent owning at least 10% of the voting shares of the Canadian company paying the dividend pays only 5% withholding instead of 25%; below that ownership threshold, the treaty rate is 15%. The same logic runs in reverse for a Canadian parent receiving dividends from a US subsidiary.

The specific rate always depends on which country's treaty actually applies — Canada has different treaties with different rates and ownership tests for each country, and some countries have no treaty with Canada at all, leaving the full domestic withholding rate in place. Check the actual treaty text for the country involved before assuming a rate.

This isn't only a corporate concern. An individual who personally owns shares in a foreign company, a foreign rental property, or a foreign brokerage account can owe T1134 and T1135 in their own right — these obligations follow the Canadian resident who owns the property, not just corporations that own it.

See how a corporation's real numbers change once you factor in structure — Compoundfork models the domestic side of the picture these forms report on.

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