Lepore & Company assists Canadian residents, Canadian corporations and their foreign affiliates, non-residents, and foreign and U.S. companies with the Canadian tax issues that arise when income, ownership, or activity crosses a border. We also work alongside lawyers and accountants who need Canadian tax support on a file for their own clients.
International-tax matters rarely involve a single rule. A single situation — a foreign investment, a related-party payment, a move into or out of Canada, a property sale — can touch domestic income tax, a bilateral tax treaty, withholding obligations, information-reporting forms, the foreign-affiliate and FAPI rules, GST/HST, and CRA review or dispute procedure at the same time. This page explains how we help and points to the specific service that fits your situation.
Who We Help
Canadian Residents
Reporting foreign-source income, claiming foreign tax credits, and meeting information-return obligations such as T1135.
Canadian Businesses
Foreign affiliate status, FAPI, T1134 reporting, and related-party transaction documentation.
U.S. and Foreign Companies
Entity choice, permanent establishment exposure, payroll and withholding obligations, and Canadian filing requirements.
Non-Residents
Rental income, employment or investment income, and the withholding and clearance-certificate process on a property sale.
Lawyers and Accountants
Canadian tax input on a client file, a closing, or a cross-border structure.
Taxpayers Facing CRA Reviews
Foreign-tax-credit reviews, information-return reviews, and reassessments.
International Tax Services
Foreign Tax Credits
If you paid or had tax withheld on foreign-source income, you may be able to claim a Canadian foreign tax credit — but not automatically, and not always for the full amount. The credit is limited by rate issues under Canada's tax treaties, by the character and source of the income, and by the evidence CRA expects to support the claim. CRA reviews of foreign tax credit claims are common. See Foreign Tax Credits: What Evidence Does CRA Require? for more on what CRA looks for.
Tax Treaties
Canada's bilateral tax treaties address residence, source of income, permanent establishment, reduced withholding rates, and relief from double taxation. Treaty relief is not automatic — it depends on which treaty applies, how the specific article is worded, and whether the required forms and evidence are filed.
Foreign Affiliates, FAPI, and T1134
These are related but distinct issues. A foreign affiliate is a foreign corporation in which a Canadian taxpayer holds a sufficient interest; a controlled foreign affiliate is a narrower category within that; FAPI (Foreign Accrual Property Income) is a specific attribution regime that can require certain passive income earned by a controlled foreign affiliate to be included in the Canadian shareholder's income; and the annual T1134 filing is used to report foreign affiliate holdings to CRA. Filing a T1134 does not by itself mean FAPI applies, and FAPI exposure does not depend only on whether a T1134 filing was made. See Liu v. The King: Limits on Using Subsection 152(9) to Add a FAPI Basis for a case illustrating this distinction in practice.
T106 and Related-Party Cross-Border Transactions
We assist with T106 Reporting for Canadian corporations with non-arm's-length cross-border dealings — loans, management fees, services, royalties, or goods — including documentation supporting that the terms of those transactions are consistent with transfer-pricing principles. Filing thresholds and penalty exposure depend on the current legislation and your specific facts; we review this against the applicable rules for each client rather than quoting a general figure here.
T1135 Foreign-Property Reporting
Canadian residents and certain Canadian entities may need to file Form T1135 where they hold specified foreign property above the applicable cost threshold. T1135 is distinct from T1134: T1135 generally concerns specified foreign property, while T1134 concerns interests in foreign affiliates. We assist with determining whether the form is required, preparing current and late filings, organizing supporting information, and responding to CRA reviews.
Non-Resident Withholding Tax
We advise on Withholding Taxes under Part XIII on certain payments to non-residents — including interest, dividends, rents, and royalties — subject to reduced treaty rates where beneficial ownership and other treaty conditions are met. Payers are responsible for withholding correctly, for supporting documentation, and for NR4 reporting. See Beneficial Ownership and Part XIII Withholding Tax: Lessons from C&W Offshore for a case illustrating how beneficial-ownership questions can affect the withholding rate.
U.S. and Foreign Companies Doing Business in Canada
Before hiring staff, signing contracts, or starting operations in Canada, a foreign or U.S. company should consider its entity structure, whether its activity creates a permanent establishment, Canadian corporate filing obligations, payroll withholding, Regulation 102 and Regulation 105 withholding on services performed in Canada, GST/HST registration, transfer pricing and T106 exposure, and provincial rules that can vary by jurisdiction. These issues interact, and the right approach depends on the specific transaction. For related inbound-structuring questions, see our Cross-Border Tax service — this page is a starting point, not a substitute for advice on your structure.
Non-Resident Tax and Canadian Property
Non-residents earning Canadian-source income — rental income, employment income, or investment income — have Canadian filing and withholding obligations that differ from a resident's; see Tax for Non-Residents for an overview. Disposing of certain taxable Canadian property, including some real estate and share sales, can trigger a withholding and clearance-certificate process under section 116, with a T2062 Certificate of Compliance filing where applicable — our Selling Shares of a Canadian Real Estate Company: The Treaty Risk for Non-Residents article discusses one such fact pattern. Section 116 does not apply to every property or share sale; whether it applies depends on the type of property and the facts of the transaction.
CRA International-Tax Audits and Disputes
International-tax files can attract CRA information requests, foreign-tax-credit reviews, and reviews of T106, T1134, or T1135 filings, and can lead to reassessment. We assist with CRA Audit and Appeals where a reassessment is disputed, including filing an objection. Where a filing was missed or inaccurate, the Voluntary Disclosures Program may be an option — but only where the conditions for eligibility are still met, which generally excludes situations where CRA enforcement action has already begun.
Common Situations We Assist With
- CRA denied or reduced my foreign tax credit.
- My Canadian company owns or controls a foreign corporation.
- I may have missed a T1134, T106, or T1135 filing.
- A Canadian company is making payments to a non-resident.
- A U.S. company is hiring people or performing work in Canada.
- A non-resident is selling Canadian real estate or shares.
- CRA has requested foreign bank, corporate, or ownership records.
- I am moving into or out of Canada.
Every situation depends on its specific facts; the outcome in your case will depend on your circumstances.
Why These Files Require Coordinated Analysis
A single international-tax matter often touches several regimes at once: domestic income tax, the applicable treaty, foreign tax credits, withholding, the foreign-affiliate and FAPI rules, information returns like T106/T1134/T1135, transfer pricing, GST/HST, payroll, corporate residence, and CRA audit or objection procedure. Addressing one issue in isolation — filing a form without checking the treaty position, or claiming a credit without confirming the withholding was correctly applied — can create a gap elsewhere. We look at the file as a whole before recommending next steps.
Selected International Tax Insights
Foreign Tax Credits and Treaties
Foreign Tax Credits: What Evidence Does CRA Require?
Read the analysis
Foreign Tax Credits and Treaties
Selling Shares of a Canadian Real Estate Company: The Treaty Risk for Non-Residents
Read the analysis
Foreign Affiliates and CRA Procedure
Liu v. The King: Limits on Using Subsection 152(9) to Add a FAPI Basis
Read the analysis
Cross-Border Corporate Status and Structuring
Somerset Limited: Why a 1943 Corporation Remained a CCPC After a BVI Continuance
Read the analysis
Withholding and Non-Resident Tax
Beneficial Ownership and Part XIII Withholding Tax: Lessons from C&W Offshore
Read the analysis
FAQ
What is Canadian international tax?
It's the set of Canadian rules that apply when income, ownership, or activity crosses a border — including foreign income reporting, tax treaties, withholding, foreign affiliate and FAPI rules, and cross-border information returns.
Do I need to report foreign income in Canada?
Canadian residents are generally taxed on worldwide income and must report foreign income, subject to any applicable foreign tax credit. Whether a specific amount is reportable, and how it's credited, depends on the type of income and the relevant treaty.
What is the difference between T1134, T106, and T1135?
T1134 reports foreign affiliate holdings; T106 reports non-arm's-length transactions with non-residents; T1135 reports specified foreign property above a cost threshold. They serve different purposes and can apply independently of one another.
When must a Canadian payer withhold tax from a non-resident?
Generally, when making certain payments to a non-resident — such as interest, dividends, rents, or royalties — subject to any reduced rate available under an applicable treaty and its conditions, including beneficial ownership.
Does a tax treaty eliminate Canadian tax?
Not necessarily. A treaty may reduce a withholding rate, allocate taxing rights, or provide relief from double taxation, but the outcome depends on the specific treaty article, the facts, and the type of income involved.
When should a U.S. or foreign company obtain Canadian tax advice?
Before starting Canadian operations, hiring staff or contractors in Canada, or entering a contract that could create a permanent establishment — early advice can clarify entity choice, withholding, and filing obligations before they arise.
Need help with a Canadian international-tax matter?
International-tax issues often involve overlapping filing, treaty, withholding, and documentation requirements. Lepore & Company assists Canadian and foreign taxpayers, businesses, and their advisors with Canadian international-tax compliance, planning, and disputes.
International-tax matters are led by Affan Khalid, CPA, CA, Tax Partner at Lepore & Company in Stoney Creek, serving clients in Hamilton, across Ontario, and throughout Canada.
get in touch with our teamThis page provides general information about Canadian international-tax services and does not constitute legal, tax, or accounting advice. International-tax outcomes depend on the relevant facts, entities, transactions, jurisdictions, treaties, and filing history. Please obtain professional advice before acting on any international-tax matter.