The T106 Information Return is a mandatory filing requirement for Canadian taxpayers engaged in cross-border transactions with non-arm’s length non-residents. This includes individuals, corporations, trusts, and partnerships conducting business with related entities outside Canada.
At Lepore & Company, we help businesses and individuals navigate T106 reporting, ensuring compliance with the Canada Revenue Agency (CRA) regulations while minimizing audit risks and penalties.
What is T106 Reporting?
The CRA requires taxpayers to disclose transactions with related foreign entities to prevent tax avoidance and ensure proper reporting of international dealings. T106 must be filed if the total amount of cross-border transactions exceeds $1 million CAD in a tax year.
The types of transactions that require reporting include:
- Sales and purchases of goods and services
- Royalties, licensing fees, and commissions
- Management fees and cost-sharing arrangements
- Interest payments and loans
- Transfer of assets
- Guarantees and other financial transactions
Failure to file the T106 or incorrect reporting can lead to significant penalties and increased scrutiny from the CRA.
Who Needs to File a T106?
You are required to file T106 if you are a:
- 📌 Canadian corporation, individual, trust, or partnership engaged in transactions with a non-arm’s length foreign entity.
- 📌 Taxpayer conducting intercompany transactions with a related foreign subsidiary, parent company, or affiliate.
- 📌 Business with cross-border financial dealings, including loans, interest payments, and service arrangements.
If the total value of related-party transactions exceeds $1 million CAD, T106 filing is mandatory.
Our T106 Reporting Services
Compliance & Risk Assessment
- Review transactions with non-arm’s length non-residents.
- Identify potential compliance risks and CRA reporting requirements.
- Determine if T106 filing is required based on transaction thresholds.
Preparation & Filing of T106 Returns
- 📌 Compile and organize transaction details.
- 📌 Ensure proper documentation and valuation of cross-border transactions.
- 📌 File T106 forms accurately and on time to avoid penalties.
Transfer Pricing Documentation Support
- Ensure consistency between T106 reporting and transfer pricing policies.
- Prepare supporting documentation to justify intercompany transactions.
- Assist in case of CRA audits or inquiries related to transfer pricing.
Audit Support & CRA Dispute Resolution
- 📌 Represent businesses in case of CRA audits on T106 filings.
- 📌 Respond to CRA inquiries and provide necessary supporting documents.
- 📌 Assist with voluntary disclosures for past non-compliance.
Penalties for Non-Compliance
Failing to file a T106 return on time or providing incorrect information can result in:
- ⚠ Penalties of up to $2,500 per year for non-filing or late filing.
- ⚠ Additional penalties for gross negligence or misrepresentation.
- ⚠ Increased likelihood of a CRA transfer pricing audit.
Our experts help prevent costly mistakes and ensure full compliance with CRA regulations.
Why Choose Lepore & Company for T106 Reporting?
- ✅ Specialized Expertise in Cross-Border Transactions – Ensuring compliance while optimizing tax efficiency.
- ✅ CRA Compliance & Risk Mitigation – Avoiding penalties and ensuring accurate reporting.
- ✅ Comprehensive Transfer Pricing Support – Aligning T106 filings with international tax rules.
- ✅ Proactive Audit Representation – Protecting your business in case of CRA inquiries.
Ensure Smooth T106 Compliance – Contact Us Today!
T106 reporting is a crucial part of cross-border tax compliance for Canadian businesses. At Lepore & Company, we provide expert guidance, accurate filings, and audit support, ensuring your international transactions remain fully compliant with CRA regulations.
Get in touch today to simplify your T106 reporting!