2022-0950591C6 2022 CTF Round Table - Q12 - T1134

Principal Issues: Various Questions Relating to T1134 Reporting (for 2021 and later taxation years).

Position: General comments provided. See below.

Author: Patel, Komal

2022 CTF Annual Conference

CRA Roundtable

Question 12: T1134 Reporting

A. Various Questions Relating to T1134 Reporting (for 2021 and later taxation years)

(i) Part I Section 3E – Lower tier non-controlled foreign affiliates (Table)

Column 6 of the table asks, “Were there any transformation transactions during this reporting period that impacted its surplus account balance(s)?”. The term “transformation transactions” is not defined with sufficient clarity. The term also appears in the context of Part II Section 3B regarding surplus accounts with more specific questions.

Can the CRA provide more guidance on the meaning of this term?

(ii) Part II Section 1D – Foreign Affiliate Dumping Rules (Table)

Where a corporation resident in Canada is not controlled by a non-resident such that the conditions in subsection 212.3(1) are not met, should this table be left blank?

(iii) Part II Section 3A – Surplus Accounts – 4. Upstream Loan Rules (Table)

Column 2 of the Table requires reporting entities to identify if a specified debtor (as defined in subsection 90(15)) owes an amount to the foreign affiliate (or a partnership of which the foreign affiliate was a member) at any time during the reporting period. If so, columns 3 and 4 require the reporting entities to indicate if subsections 90(6) or 90(8) apply to that debt. As the application of subsection 90(6) or paragraph 90(8)(a) may not be confirmed until after the T1134 information return is required to be filed, the reporting entities may not have a firm answer as to the application of subsection 90(6)/paragraph 90(8)(a).

Can the CRA provide guidance as to how the reporting entities should respond to columns 3 and 4 in such an instance?

B. T1134 Missing Substantial Information (for 2021 and later taxation years)

In technical interpretation 2019-0791541I7 the CRA indicated that an information return that is missing substantial information will be considered invalid, and therefore, will not be considered to have been filed. Can the CRA provide examples of what it would consider to be “substantial information” on the T1134 information return?

CRA Response

To assist taxpayers in preparing the T1134 information return, the CRA maintains a question and answer webpage titled “Questions and answers about Form T1134” - Canada.ca (the “Q&A Page”). The Q&A Page provides additional instructions regarding how to complete the information return in certain situations.

Over the past year the CRA has received a number of requests from different members of the tax community for guidance in respect of situations not covered by the Q&A Page. The CRA is currently working to update the Q& A Page to provide responses to those questions as well as to the above Roundtable questions.

Komal Patel

2022-095059

November 29, 2022

Response prepared by:

Jess Johns

International Technical Issues Section

International and Large Business Directorate

Compliance Programs Branch

All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without the prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5.

© His Majesty the King in Right of Canada, 2023

Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistribuer de l'information, sous quelque forme ou par quelque moyen que ce soit, de façon électronique, mécanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

© Sa Majesté le Roi du Chef du Canada, 2023