Missed T1134 Filings? Using CRA’s VDP for Foreign Affiliate Reporting

The short answer

If you were required to file Form T1134 for one or more prior years and did not file it on time, the CRA’s Voluntary Disclosures Program (VDP) may provide a route to correct the non-compliance and obtain relief from penalties. For the general VDP rules, see our CRA Voluntary Disclosures Program (VDP) 2026 guide; this article focuses on what is different about foreign-affiliate files.

Under the current VDP policy, an eligible unprompted application normally receives 100% relief from applicable penalties and 75% relief from applicable interest. An eligible prompted application normally receives up to 100% relief from applicable penalties and 25% relief from applicable interest. Any underlying tax remains payable.

A T1134 case can potentially qualify even where no additional Canadian income tax is owing. The current VDP criteria require an error or omission with applicable interest charges, penalties, or both, and a late or missing T1134 can itself attract information-return penalties. Acceptance is never automatic, however, and the first step is not to file old forms as quickly as possible. It is to determine:

• whether a T1134 was actually required for each year;
• which foreign entities were foreign affiliates or controlled foreign affiliates;
• which Canadian taxpayer had the filing obligation;
• which T1134 version and filing deadline applied to each year;
• whether the foreign corporation earned income that should also have been reported in Canada;
• whether other foreign-reporting forms were missed; and
• whether the VDP is still available and, if so, whether the application is unprompted or prompted.

A multi-year T1134 disclosure is usually an international-tax reconstruction project, not a clerical late-filing exercise.

What is Form T1134?

Form T1134, Information Return Relating to Controlled and Non-Controlled Foreign Affiliates, is Canada’s principal annual information return for foreign affiliates. Section 233.4 of the Income Tax Act requires a reporting entity to file a prescribed return in respect of each foreign affiliate for the relevant taxation year or fiscal period.

For taxation years beginning after 2020, the return is due within 10 months after the end of the reporting entity’s taxation year or fiscal period. A Canadian corporation with a December 31, 2025 year-end and a reportable foreign affiliate therefore generally has a T1134 deadline of October 31, 2026.

A T1134 filing consists of a Summary and, subject to specific exceptions, a separate Supplement for each foreign affiliate. Controlled foreign affiliates generally require more extensive reporting. Our T1134 foreign affiliate reporting page covers the ongoing annual compliance side.

A missed T1134 is not the same problem as a missed T1135

T1134 and T1135 are both foreign-reporting forms, but they address different regimes. T1134 concerns foreign affiliates: broadly, non-resident corporations (and certain trusts) in which a Canadian taxpayer, together with related persons, holds a sufficient equity interest. T1135 concerns specified foreign property where the total cost amount exceeds the reporting threshold.

Shares or indebtedness of a foreign affiliate are excluded from specified foreign property for T1135 purposes. The fact that a foreign corporation is reported on T1134 therefore does not mean the same shares belong on T1135. At the same time, a taxpayer with a foreign affiliate may own other foreign assets, such as foreign bank accounts or portfolio investments, that do require T1135 reporting. In a VDP review, both regimes should be considered independently rather than treated as substitutes.

First question: was the foreign corporation actually a “foreign affiliate”?

Not every shareholding in a foreign corporation creates a T1134 filing obligation. The Income Tax Act definition of “foreign affiliate” in subsection 95(1) generally requires two tests to be met at the relevant time:

• the taxpayer’s equity percentage in the non-resident corporation must be at least 1%; and
• the total of the equity percentages of the taxpayer and each person related to the taxpayer must be at least 10%.

This can produce results that surprise taxpayers. It is not a simple “10% ownership” rule.

Example 1 — wholly owned foreign company. A Canadian-resident individual or corporation owns all the shares of a corporation incorporated and resident outside Canada. The foreign corporation will ordinarily be a foreign affiliate, and will usually also be a controlled foreign affiliate.

Example 2 — 5% ownership plus related-family ownership. A Canadian taxpayer owns 5% of a foreign corporation and related persons own another 6%. The taxpayer meets the 1% individual threshold and the combined related group exceeds 10%. The foreign corporation may therefore be a foreign affiliate of that taxpayer even though the taxpayer personally owns only 5%.

Example 3 — less than 1% personally. A taxpayer owns 0.5%, even though related persons own substantial additional shares. The individual 1% threshold is not met, so under the basic definition the corporation generally would not be that taxpayer’s foreign affiliate.

These examples are simplified. Equity percentage includes indirect ownership through other corporations, and partnerships, trusts, multiple share classes and tracking interests can all require more detailed analysis. For VDP purposes, the ownership chart should be reconstructed year by year rather than assuming the percentages never changed.

Controlled foreign affiliate status can change the file

A foreign affiliate is not necessarily a controlled foreign affiliate. Controlled status is determined under a separate statutory test that can take into account shares held by the taxpayer, by persons not dealing at arm’s length with the taxpayer, and by a limited number of other Canadian-resident shareholders. It should not be reduced to a single ownership percentage.

Controlled status matters for two reasons. First, a controlled foreign affiliate generally requires more detailed T1134 reporting, including financial statements. Second, it brings the foreign accrual property income (FAPI) regime into play. If a controlled foreign affiliate earned passive or other income that constitutes FAPI, the Canadian taxpayer may have had an income inclusion under section 91 even though no dividend was paid.

A file that initially looks like “just a late T1134” can therefore become a tax-return amendment file as well. The same is true where the foreign affiliate paid dividends, made or received upstream or intercompany loans, underwent a reorganization, disposed of property, or generated surplus balances relevant to Canadian tax. A competent T1134 review asks two separate questions: which information returns were missed, and was Canadian taxable income also omitted or misreported? Correcting only the first can leave a VDP incomplete.

Who has to file T1134?

Under section 233.4, a reporting entity includes, broadly:

• a taxpayer resident in Canada (other than one all of whose taxable income is exempt from Part I tax) of which a non-resident corporation is a foreign affiliate at any time in the year;
• certain Canadian-resident taxpayers in respect of a non-resident trust that is a foreign affiliate; and
• certain partnerships where the statutory membership conditions are met and a non-resident corporation or trust would be a foreign affiliate if the partnership were a Canadian-resident taxpayer.

CRA states that a T1134 may be required where the entity was a foreign affiliate or controlled foreign affiliate at any time in the reporting taxpayer’s year, including where the affiliate was acquired, disposed of or ceased to be controlled during the year.

CRA also applies an important administrative rule for tiered Canadian structures. If Canadian Parent owns Canadian Sub, and Canadian Sub owns the foreign affiliate, CRA’s guidance is that only the lowest-tier Canadian corporation reports that foreign affiliate. This is one reason historical T1134 work must begin with the Canadian ownership structure, not just a list of foreign companies.

The historical filing deadline matters

A VDP often spans several years, and the T1134 deadline has changed over time:

• Taxation years beginning before 2020: generally within 15 months after year-end.
• Taxation years beginning in 2020: within 12 months after year-end.
• Taxation years beginning after 2020: within 10 months after year-end.

The form also changed. The current version applies to taxation years beginning after 2020 and asks for materially more information than the earlier form. In a multi-year disclosure, the correct deadline, the correct form version and the administrative relief in effect for that year should be applied to each year separately. Do not simply use the current form and current thresholds for every historical period.

What does CRA expect on the current T1134?

The current T1134 is substantially more than a schedule of corporate names and countries. Depending on the structure, it can require information about:

• the reporting entity and the related Canadian group, including an organizational chart;
• direct and indirect ownership, equity percentages and share classes;
• foreign taxpayer identification numbers;
• foreign-affiliate financial information, gross revenue and the composition of revenue;
• active business income, FAPI, foreign accrual property losses and foreign accrual capital losses;
• surplus-related information and dividends;
• acquisitions and dispositions of foreign-affiliate shares;
• loans and indebtedness, including upstream loans;
• elections, reorganizations and foreign affiliate dumping questions; and
• lower-tier foreign affiliates.

That information gives CRA visibility into FAPI, surplus accounts, dividend deductions, cross-border loans and multi-tier structures. A missing T1134 is therefore not merely an administrative blank; it can leave CRA without information it uses in international-tax risk assessment, which is part of why the penalty regime is as serious as it is.

Foreign financial statements can be the hardest part

For taxation years beginning after 2020, CRA requires financial statements for each controlled foreign affiliate and for other foreign affiliates in which the reporting entity directly or indirectly holds at least 20% of the voting rights. CRA’s T1134 questions and answers state that consolidated financial statements are not accepted where unconsolidated statements are required.

In a multi-year VDP, locating historical records can be one of the hardest parts of the file. A taxpayer may need unconsolidated financial statements or trial balances, local tax returns, shareholder registers and incorporation records, dividend and loan documentation, bank statements, and records of reorganizations or ownership changes. Where information genuinely cannot be obtained, the T1134 should not simply be filed with unexplained blanks.

Section 233.5: the due-diligence rule for unavailable information

Section 233.5 of the Income Tax Act provides a specific rule for certain information required on a T1134 that is not available when the return is filed. In broad terms, it applies where the unavailability is reasonably disclosed in the return, the taxpayer exercised due diligence in attempting to obtain the information, the other statutory conditions are met, and the information is filed within 90 days after it later becomes available. For a controlled foreign affiliate, paragraph 233.5(c.2) can impose an additional condition tied to whether, when relevant transactions were entered into, it was reasonable to expect that sufficient information would be available to comply with the T1134 reporting requirement. CRA’s T1134 guidance similarly asks filers to explain in the return what information is unavailable, why, and what steps were taken to obtain it.

This rule is important, but it is not a general extension of the T1134 filing deadline. It deals with unavailable information in a return that is otherwise filed. A taxpayer should not leave a T1134 unfiled for years because some foreign records are difficult to obtain.

CRA also states that an information return missing substantial information may be considered invalid and therefore not filed, and that this is determined case by case. There is no bright-line test for “substantial.” A placeholder return filled with unsupported figures or large unexplained blanks can therefore create its own problems.

Dormant-affiliate relief is narrower than many assume

CRA provides administrative relief for certain dormant or inactive foreign affiliates. For taxation years beginning after 2020, CRA says a Supplement does not need to be filed for a foreign affiliate where all of the following conditions are met:

• the total cost amount to the reporting entity of its interest in the affiliate is less than $100,000 at any time in the year;
• the affiliate’s gross receipts for its taxation year are less than $100,000; and
• the fair market value of the affiliate’s total assets does not exceed $1,000,000.

This should not be turned into “no T1134 is required if the company is inactive.” The relief removes the Supplement for a qualifying affiliate; CRA states that the T1134 Summary must still be completed. The thresholds and conditions have also differed for earlier years, so a multi-year VDP should apply the policy that governed each year. A foreign corporation with no taxable income is not necessarily “dormant” for this purpose; the specific conditions have to be tested.

What are the penalties for a late or missing T1134?

T1134 penalties escalate significantly depending on the facts. The following summary is a guide only; the statutory conditions must be reviewed before applying any amount.

The penalty formulas also contain additional statutory deeming rules for certain shares or indebtedness held through controlled foreign affiliates, including subsection 162(10.2), so the table is a high-level summary rather than a complete penalty computation.

Two points deserve emphasis. First, the “5% foreign affiliate penalty” is not automatic merely because a T1134 is more than 24 months late. Subsection 162(10.1) applies only where the person or partnership is already liable under subsection 162(10), which requires a knowing failure or circumstances amounting to gross negligence, and the failure continues for more than 24 months. Second, subsection 163(2.4) is a separate penalty for false statements or omissions made knowingly or with gross negligence; it should not be confused with ordinary late filing.

These larger penalties are serious, but they turn on knowledge or gross negligence. That distinction matters both when assessing exposure outside the VDP and when weighing the value of a voluntary disclosure.

Why a T1134 file can qualify even when no tax is owing

A common misconception is that a VDP only makes sense where there is unreported income and additional tax to pay. That is not the current rule. IC00-1R7 requires an error or omission with applicable interest charges, penalties, or both. A missing T1134 can create penalty exposure even where the foreign corporation carried on an active business, no dividend was paid to Canada, no FAPI arose, and the Canadian return otherwise reported all taxable income correctly.

The absence of additional tax therefore does not take a late T1134 outside the VDP; the penalty exposure itself can be the relevant non-compliance. All other VDP conditions must still be met, and relief remains discretionary.

How much VDP relief can apply to T1134 penalties?

For an eligible unprompted application, relief is normally 100% of applicable penalties and 75% of applicable interest. For an eligible prompted application, it is normally up to 100% of applicable penalties and 25% of applicable interest. In either case, the disclosed matters are not referred for criminal prosecution, and gross negligence penalties do not apply to the information disclosed.

For a T1134-only file, penalty relief may be the main economic benefit because there may be little or no underlying tax. Where the file also involves omitted FAPI, dividends or other Canadian taxable income, interest relief becomes material as well, and the unprompted/prompted distinction can make a substantial difference.

When is a T1134 disclosure unprompted, prompted or too late?

The classification should be reviewed before any historical forms are submitted. Article 20 explains the general framework; applied to T1134 files:

• Generally unprompted: the taxpayer comes forward before CRA has communicated about the identified T1134 issue. A general education letter or notice about foreign-reporting obligations does not normally make an application prompted.
• Generally prompted: CRA has specifically identified a missing foreign-affiliate filing, has given the taxpayer a deadline to correct it, or has already received third-party information regarding the taxpayer’s potential non-compliance, and the application remains voluntary.
• Not voluntary: an audit or investigation has already been initiated against the taxpayer or a related taxpayer in respect of the information being disclosed. For VDP purposes, that can include proceedings by law-enforcement agencies, securities commissions or other regulated authorities, not only CRA.

Current CRA policy focuses on whether an audit or investigation has been initiated in respect of the information being disclosed. An audit involving an unrelated issue therefore does not necessarily make a separate T1134 disclosure involuntary, although the facts and relationship between the issues still need to be reviewed.

The practical problem is timing. A taxpayer may discover the T1134 issue while reviewing a CRA letter, a foreign company’s records or a family member’s Canadian reporting. The window should be assessed promptly, before CRA activity advances.

How many years should be included?

IC00-1R7 generally requires supporting documentation for the most recent ten years where the errors or omissions relate to assets or income located outside Canada, so a multi-year T1134 disclosure will usually fall within that ten-year framework. Ten years is not a rule that nothing earlier matters. CRA requires disclosure of all known errors and omissions and may request additional documentation at its discretion.

The ten-year documentation expectation is also distinct from the historical T1134 filing deadlines, CRA’s assessment powers, the limitation period for penalty and interest relief, and the years for which income tax returns may need adjustment. A T1134 VDP should begin with the full ownership and compliance history, then determine the correct filing package under the current policy.

A practical T1134 VDP reconstruction process

A strong T1134 disclosure usually proceeds in this order:

1. Reconstruct Canadian ownership. Identify every Canadian individual, corporation, trust or partnership that directly or indirectly held an interest in the foreign entity in each year.
2. Identify all foreign entities. Do not stop at the company the client first mentions. Identify parent companies, subsidiaries, lower-tier corporations, non-resident trusts and entities created or dissolved during the period.
3. Determine foreign-affiliate status year by year. Apply the section 95 ownership tests, related-person holdings, indirect ownership and controlled-foreign-affiliate rules for each period.
4. Determine the correct reporting entity. In a Canadian corporate chain, confirm which entity has the filing obligation, applying CRA’s lowest-tier policy where relevant.
5. Map deadlines and form versions. For each year, identify the year-end, the T1134 due date, the applicable form version, whether the affiliate existed at any time in the year, and whether any administrative relief applied.
6. Reconstruct foreign financial information. Gather financial statements, trial balances, foreign tax returns, shareholder records, legal documents, loan schedules and bank records, and document what could not be obtained.
7. Test the Canadian tax returns. Determine whether the affiliate produced FAPI, dividends and the related section 90 inclusions and section 113 deductions, foreign exchange consequences, loans, gains or losses, reorganizations or other Canadian tax consequences.
8. Review the other foreign-reporting forms. Consider T106 reporting, T1135, T1141 and T1142 rather than assuming T1134 is the only omission.
9. Determine VDP status. Review CRA correspondence, account history and any known third-party information to classify the disclosure as unprompted, prompted or no longer voluntary.
10. Prepare one consistent package. The RC199 narrative, T1134 forms, amended returns, foreign-affiliate calculations and supporting documents should all tell the same factual story.

Why “just file the old T1134s” can be the wrong first move

Once a missed T1134 is discovered, the instinct may be to prepare the forms and send them to CRA immediately. That is not always the best sequence. Before filing, determine whether the VDP is available and whether the disclosure is unprompted or prompted, whether other returns also need correction, whether FAPI or other income was omitted, whether there are additional foreign affiliates, whether the historical records support accurate returns, and whether section 233.5 disclosures are needed for unavailable information.

This does not mean waiting unnecessarily. The objective is prompt, disciplined reconstruction, not rushed filing and not indefinite investigation. A VDP can be denied if it is materially incomplete; on the other hand, waiting can allow an unprompted file to become prompted, or an audit to begin.

Practice experience at Lepore & Company

T1134 voluntary disclosures are a recurring and technically demanding part of our international-tax practice. Lepore & Company prepares approximately 5 to 10 VDP submissions per month across a range of domestic and international tax matters, and foreign-affiliate non-compliance is one of the more complex categories we regularly handle.

These files often involve far more than completing historical forms. We may need to reconstruct ownership chains, review foreign financial statements, identify controlled foreign affiliates, determine whether FAPI or other Canadian income was omitted, coordinate T1134 with T106 and other foreign-reporting obligations, and prepare a VDP narrative that is consistent with the underlying tax filings. That work matters most where a client has several foreign entities or the compliance history spans many years.

Frequently asked questions

Can a late T1134 qualify for CRA’s VDP if no extra tax is owing?

Potentially, yes. IC00-1R7 requires an error or omission with applicable interest charges, penalties, or both, and a late T1134 can itself create penalty exposure even where no additional Canadian income tax is payable. All other VDP conditions must still be met, and relief is discretionary.

What is the current T1134 filing deadline?

For taxation years or fiscal periods beginning after 2020, Form T1134 is due within 10 months after the end of the reporting entity’s taxation year or fiscal period.

Does a T1134 that is more than 24 months late automatically attract the 5% penalty?

No. The additional penalty under subsection 162(10.1) requires liability under subsection 162(10), which involves a knowing failure or circumstances amounting to gross negligence, together with a failure that continues for more than 24 months.

What is the ordinary late-filing penalty?

Under subsection 162(7), generally the greater of $100 and $25 for each day the failure continues, up to 100 days.

What happens if CRA sends a formal demand for the T1134?

Where a taxpayer knowingly, or in circumstances amounting to gross negligence, fails to comply with a demand under section 233, the subsection 162(10) penalty is calculated at $1,000 per month for up to 24 months, less any subsection 162(7) penalty.

Does every foreign corporation require a T1134?

No. The non-resident corporation must be a foreign affiliate. Under the basic definition, the taxpayer generally needs an equity percentage of at least 1%, and the taxpayer and related persons together generally need at least 10%.

I owned the foreign company for only part of the year. Do I still have to file?

Potentially, yes. CRA states that a T1134 can be required where the entity was a foreign affiliate or controlled foreign affiliate at any time in the reporting taxpayer’s year, including where it was acquired, sold or changed status during the year.

The foreign company had no income. Is a T1134 still required?

Possibly. The obligation depends on foreign-affiliate status, not on whether the company earned taxable income. CRA’s dormant-affiliate relief can remove the Supplement where its specific conditions are met, but the Summary must still be completed.

What if I cannot obtain all of the old foreign-company records?

Section 233.5 can apply to genuinely unavailable information where the taxpayer exercised due diligence, reasonably disclosed the unavailability in the return and meets the other statutory conditions. If the information later becomes available, it generally must be filed within 90 days. It does not extend the filing deadline itself.

Can I submit consolidated foreign financial statements?

CRA’s T1134 guidance states that consolidated financial statements are not accepted where unconsolidated statements are required.

Does a foreign affiliate also go on Form T1135?

Shares or indebtedness of a foreign affiliate are excluded from specified foreign property for T1135 purposes. The taxpayer may, however, own other foreign property that separately requires T1135 reporting.

Can a T1134 VDP also correct unreported FAPI?

Yes. If unreported FAPI forms part of the known non-compliance, the VDP should generally address it together with the T1134 filings so the disclosure is complete. All known non-compliance needs to be included, not only the missing information return.

What if CRA has already contacted me about T1134?

A specific CRA communication about the missing filing will generally make the application prompted if it remains voluntary. If an audit or investigation has already been initiated in respect of the issue, the application is not voluntary. Review the actual communication before filing anything.

Can my previous accountant’s failure to file eliminate the penalties?

Not automatically. The filing obligation remains the taxpayer’s. The reasons for the non-compliance may be relevant to penalty analysis or relief, but reliance on a preparer should not be treated as a guaranteed defence.

Should I file the late T1134s before making the VDP application?

Usually the better approach is to scope the complete correction first. CRA’s current VDP process expects Form RC199 together with the returns, forms and supporting documentation needed to correct the non-compliance, and filing forms separately before evaluating the VDP can complicate the strategy.

Work with Lepore & Company

A T1134 voluntary disclosure is usually more complex than the phrase “late foreign-affiliate form” suggests. The key work is determining which foreign corporations were actually foreign affiliates, identifying which Canadian taxpayer had the filing obligation, reconstructing the ownership and financial information, determining whether FAPI or other Canadian tax consequences were missed, and presenting the corrections to CRA as one complete and internally consistent disclosure.

Lepore & Company regularly handles T1134 and other international tax voluntary disclosures as part of a VDP practice that prepares approximately 5 to 10 submissions per month. If you have discovered missing T1134 filings, it is usually worth reviewing the position before simply filing the overdue forms. For the broader VDP rules, see our CRA Voluntary Disclosures Program (VDP) 2026 guide, or learn more about our voluntary disclosure services and contact us to arrange a confidential review.

Update note

This article reflects the Income Tax Act and CRA guidance available as of October 6, 2026.

Disclaimer

This article provides general information only and does not constitute legal, tax or accounting advice. Foreign-affiliate status, controlled-foreign-affiliate status, FAPI, surplus accounts, information-return penalties and VDP eligibility are highly fact-specific. CRA’s VDP is discretionary and no particular result is guaranteed.