PLEASE NOTE: THIS INFORMATION WAS ORIGINALLY SUBMITTED BY COOPERS & LYBRAND, CANADA
Earlier this month, Revenue Canada released in electronic form the final version of its new foreign affiliate reporting forms. The paper version of the forms will be available at Revenue Canada Tax Services Offices by early November.
All Canadian taxpayers holding interests in non-resident corporations or entities which are foreign affiliates must provide Revenue Canada with a description of the business activities of such foreign affiliates and related financial information. Details concerning non-controlled foreign affiliates must be reported on the new T1134-A form and details concerning controlled foreign affiliates must be reported on the new and more comprehensive T1134-B form. Taxpayers holding interests in "dormant" or "inactive" foreign affiliates (defined as a foreign affiliates with gross receipts of less than $10,000 and assets with a fair market value of less than $100,000 in a particular year) are exempt.
The new foreign reporting requirements apply to taxation years that begin after 1995. For taxation years that end in 1996, 1997 or 1998, the filing deadline will be the later of:
June 30, 1998, or
15 months after the end of the reporting taxpayer's tax year.
For taxation years that end after 1998, the filing deadline will be 15 months after the end of the reporting taxpayer's tax year.
Reporting taxpayers that receive a dividend from a foreign affiliate in respect of which an amount is deductible under subsection 91(5) or section 113 of the Income Tax Act must provide summary calculations of the exempt surplus, exempt deficit, taxable surplus, taxable deficit and underlying foreign tax of the foreign affiliate. There is no requirement to file any detailed supporting documentation, but such documentation must be available and retained for possible audit inspection.
To ensure compliance with the new reporting requirements, substantial penalties apply if a taxpayer makes a false statement, fails to file an information return or files a return after the due date. The basic penalty for late filed returns is the greater of $100 and $25 per day up to a maximum of 100 days (or $2,500) per form. If it established that an omission or false statement in a return was done knowingly or due to gross negligence, the penalty is the greater of $24,000 or 5% of the taxpayer's investment in the foreign affiliate.
Coopers & Lybrand has a team of experienced professionals who are available to assist in complying with these new reporting requirements, including the computation and documentation of surplus accounts of foreign affiliates.
The information provided herein is for general guidance on matters of interest only. The application and impact of laws, regulations and administrative practices can vary widely, based on the specific facts involved. In addition, laws, regulations and administrative practices are continually being revised. Accordingly, this information is not intended to constitute legal, accounting, tax, investment or other professional advice or service.
While every effort has been made to ensure the information provided herein is accurate and timely, no decision should be made or action taken on the basis of this information without first consulting a Coopers & Lybrand professional. Should you have any questions concerning the information provided herein or require specific advice, please contact your Coopers & Lybrand advisor, or: David W. Steele, Coopers & Lybrand, 145 King Street West, Toronto, Ontario M5H 1V8 Canada on Fax: 1-416-941-8415 or E-mail: firstname.lastname@example.org
David W. Steele
145 King Street West
Toronto, Ontario M5H 1V8
E-mail: Click Contact Link
Click Contact Link
c Business Briefing Publishing Ltd 1997 - Tel +44 (0) 171 820 7733
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).