2018-0748161C6 IFA 2018 Q.10 Proposed New Filing Deadline T1134

Principal Issues: Will the CRA confirm that it will provide relief under subsections 220(3) and (3.1) of the Act in the form of extensions and waivers of penalties for all situations in which taxpayers are unable to timely file their T1134 forms, including situations where there is a lack of sufficient financial information available within the newly restricted time period that will be required to complete and file the forms?

Position: No, the CRA will consider, on a case-by-case basis, requests for relief under subsections 220(3) and (3.1) in the form of extensions and waivers of penalties as outlined in Information Circular IC07-1R1, Taxpayer Relief Provisions.

Author: Carruthers, Lori
Section: -

IFA 2018 International Tax Conference
Canada Revenue Agency Roundtable

Question 10 - Proposed New Filing Deadline for T1134 Forms

The February 27th, 2018 Federal Budget included an amendment to the due date for the filing of T1134 forms. The amendment will reduce the timeline from 15 months after a taxpayer’s taxation year to six months after a taxpayer’s taxation year, which will align it with the filing of Canadian corporate tax returns.

It had been our understanding that one of the main reasons for the longer timeline for the filing of T1134 forms is the length of time that it takes in some foreign jurisdictions for the finalization of financial statements and tax returns. As the T1134 form requires information regarding the net income and tax paid in the foreign jurisdiction, in many cases the requisite information will not be available to allow a timely filing of the form under the revised timeline. In addition, in many cases taxpayers will not have the resources required to complete the T1134 forms at the same time that they are completing their tax returns (e.g., many employees work overtime to complete their tax returns in a timely manner and simply won’t have the capacity to simultaneously complete additional work on T1134 forms).

Will the CRA confirm that it will provide relief under subsections 220(3) and (3.1) of the Income Tax Act (the “Act”) in the form of extensions and waivers of penalties for all situations in which taxpayers are unable to timely file their T1134 forms, including situations where there is a lack of sufficient financial information available within the newly restricted time period that will be required to complete and file the forms?

CRA Response

No, the CRA will not grant an extension and waive penalties in all situations in which taxpayers are unable to timely file their T1134 forms.

Where a foreign affiliate is a controlled foreign affiliate, in our view, it should normally be possible to obtain the required information on time. In other situations, it should be possible to file the T1134 on time, but potentially with some information missing. However, in such circumstances penalties may still apply. That being said, taxpayers may find relief in the reasonable effort exception contained in paragraph 162(5)(a) of the Act or the due diligence exception contained in paragraph 233.5(c.2) of the Act.

The CRA will also consider, on a case-by-case basis, requests for relief under subsections 220(3) and (3.1) in the form of extensions and waivers of penalties as outlined in Information Circular IC07-1R1, Taxpayer Relief Provisions.

Lori M. Carruthers
2018-074816
May 16, 2018

Response provided by:
Geri Porteous
International Tax Division
International, Large Business and Investigations Branch

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