Financial reporting and accounting advisory services
You trust your external auditor to deliver not only a high-quality, independent audit of your financial statements but to provide a range of support, including assessing material risks, evaluating internal controls and raising awareness around new and amended accounting standards.
Accounting Standards for Private Enterprises
Get the clear financial picture you need with the accounting standards team at Grant Thornton LLP. Our experts have extensive experience with private enterprises of all sizes in all industries, an in-depth knowledge of today’s accounting standards, and are directly involved in the standard-setting process.
International Financial Reporting Standards
Whether you are already using IFRS or considering a transition to this global framework, Grant Thornton LLP’s accounting standards team is here to help.
Accounting Standards for Not-for-Profit Organizations
From small, community organizations to large, national charities, you can count on Grant Thornton LLP’s accounting standards team for in-depth knowledge and trusted advice.
Public Sector Accounting Standards
Working for a public-sector organization comes with a unique set of requirements for accounting and financial reporting. Grant Thornton LLP’s accounting standards team has the practical, public-sector experience and in-depth knowledge you need.
Tax planning and compliance
Whether you are a private or public organization, your goal is to manage the critical aspects of tax compliance, and achieve the most effective results. At Grant Thornton, we focus on delivering relevant advice, and providing an integrated planning approach to help you fulfill compliance obligations.
Research & development, government incentives
Are you developing innovative processes or products, undertaking experimentation or solving technological problems? If so, you may qualify to claim SR&ED tax credits. This Canadian federal government initiative is designed to encourage and support innovation in Canada. Our R&D professionals are a highly-trained, diverse team of practitioners that are engineers, scientists and specialized accountants.
Keeping track of changes and developments in GST/HST, Quebec sales tax and other provincial sales taxes across Canada, can be a full-time job. The consequences for failing to adequately manage your organization’s sales tax obligations can be significant - from assessments, to forgone recoveries and cash flow implications, to customer or reputational risk.
US corporate tax
The United States has a very complex and regulated tax environment, that may undergo significant changes. Cross-border tax issues could become even more challenging for Canadian businesses looking for growth and prosperity in the biggest economy in the world.
Cross-border personal tax
In an increasingly flexible world, moving across the border may be more viable for Canadians and Americans; however, relocating may also have complex tax implications.
While there is great opportunity for businesses looking to expand globally, organizations are under increasing tax scrutiny. Regardless of your company’s size and level of international involvement—whether you’re working abroad, investing, buying and selling, borrowing or manufacturing—doing business beyond Canada’s borders comes with its fair share of tax risks.
Transfer pricing is a complex area of corporate taxation that is concerned with the intra-group pricing of goods, services, intangibles, and financial instruments. Transfer pricing has become a critical governance issue for companies, tax authorities and policy makers, and represents a principal risk area for multinationals.
Succession & estate planning
Like many private business owners today, you’ve spent your career building and running your business successfully. Now you’re faced with deciding on a successor—a successor who may or may not want your direct involvement and share your vision.
Tax Reporting & Advisory
The financial and tax reporting obligations of public markets and global tax authorities take significant resources and investment to manage. This requires calculating global tax provision estimates under US GAAP, IFRS, and other frameworks, and reconciling this reporting with tax compliance obligations.
Our transactions group takes a client-centric, integrated approach, focused on helping you make and implement the best financial strategies. We offer meaningful, actionable and holistic advice to allow you to create value, manage risks and seize opportunities. It’s what we do best: help great organizations like yours grow and thrive.
We bring a wide range of services to both individuals and businesses – including shareholders, executives, directors, lenders, creditors and other advisors who are dealing with a corporation experiencing financial challenges.
Market-driven expertise in investigation, dispute resolution and digital forensics
Viruses. Phishing. Malware infections. Malpractice by employees. Espionage. Data ransom and theft. Fraud. Cybercrime is now a leading risk to all businesses.
Running a business is challenging and you need advice you can rely on at anytime you need it. Our team dives deep into your issues, looking holistically at your organization to understand your people, processes, and systems needs at the root of your pain points. The intersection of these three things is critical to develop the solutions you need today.
Updates for creditors, limited partners, investors and shareholders.
ASPE Sec. 3041 Agriculture Understanding and applying the new ASPE Section 3041 AgricultureThe Canadian Accounting Standards Board (AcSB) has released new guidance on recognizing, measuring and disclosing biological assets and the harvested products of bio assets.
Tax alert Agricultural Clean Technology ProgramThe Agricultural Clean Technology Program will provide financial assistance to farmers and agri-businesses to help them reduce greenhouse gas (GHG) emissions.
Tax alert ACT Program – Research and Innovation Stream explainedThe ACT Research and Innovation Stream provides financial support to organizations engaged in pre-market innovation.
Tax alert ACT Program – Adoption Stream explainedThe ACT Adoption Stream provides non-repayable funding to help farmers and agri-business with the purchase and installation of clean technologies.
Builders And Developers
Every real estate project starts with a vision. We help builders and developers solidify that vision, transform it into reality, and create value.
Rental Property Owners And Occupiers
In today’s economic climate, it’s more important than ever to have a strong advisory partner on your side.
Real Estate Service Providers
Your company plays a key role in the success of landlords, investors and owners, but who is doing the same for you?
There’s no business quite like mining. It’s volatile, risky and complex – but the potential pay-off is huge. You’re not afraid of a challenge: the key is finding the right balance between risk and reward. Whether you’re a junior prospector, a senior producer, or somewhere in between, we’ll work with you to explore, discover and extract value at every stage of the mining process.
Oil & gas
The oil and gas industry is facing many complex challenges, beyond the price of oil. These include environmental issues, access to markets, growing competition from alternative energy sources and international markets, and a rapidly changing regulatory landscape, to name but a few.
Who is impacted?
Form T1134 is an annual information return that must be filed by a Canadian-resident corporation, individual, trust or certain partnerships (Reporting Taxpayer(s)) that own(s) a foreign affiliate (FA) at any time during the year. Form T1134 consists of a T1134 Summary and a T1134 Supplement section to be completed in respect of each FA. The revised Form T1134 is applicable for taxation years beginning in 2021 or later, and as outlined further below, is due 10 months after the Reporting Taxpayer’s taxation year.
What are the changes?
The following changes were introduced by the CRA to reduce the compliance burden of completing Form T1134:
Unconsolidated financial statements – Reporting Taxpayers are not required to provide unconsolidated financial statements for non-controlled FAs or FAs in which they hold less than 20% of the FA’s voting shares, except under certain situations (for example, when certain “tracking interest” rules are deemed to apply to the Reporting Taxpayer).
Joint filing option – Form T1134 can be filed jointly by different Reporting Taxpayers where they are related, share the same year-end, and report in the same currency.
Book cost – the book cost of lower-tier FAs is no longer required to be disclosed.
Financial data disclosure – total assets, accounting net income before tax, and income or profits tax paid or payable on income of an FA are no longer required to be provided.
Number of employees – revised Form T1134 requests the total number of full-time employees in a controlled FA. The prior requirement was to provide reporting for each business that the FA carried on.
Organizational charts – Reporting Taxpayers can now submit pictorial organizational charts instead of completing specific information sections in Form T1134. The organizational chart must include the name of each entity within the ownership group (both Canadian and foreign), the country or residence of each entity and the ownership interest (expressed in percentage) that each entity holds.
Relaxation of criteria for dormant / inactive FAs – less onerous reporting is allowed for a dormant / inactive FA that meets certain criteria. It was previously required that the Reporting Taxpayer’s cost amount, at any time in the year, be less than $100,000 in all its FAs. That dollar amount is now applied on an individual FA basis. Furthermore, whereas before the FA required gross receipts under $25,000 in the year, that threshold has now been increased to $100,000. Additional information on reporting for a dormant / inactive FA is provided below.
Due to the following change, Reporting Taxpayers are now required to gather all necessary information and file Form T1134 with the CRA in respect to each of their FAs within a more compressed timeline.
Reporting timeline – historically, Form T1134 was to be filed within 15 months following the end of the Reporting Taxpayer’s year-end. This has changed as follows:
|Reporting Taxpayer's period||Shortened Form T1134 filing timeline|
|Taxation years beginning in 2020||12 months after year-end|
|Taxation years beginning in 2021 or later||10 months after year-end|
The resulting change for a typical taxation year of a Reporting Taxpayer (starting on January 1, 2021 and ending December 31, 2021) must be filed with the CRA by October 31, 2022, in respect of any FAs held at any time during the year. For a taxation year of a Reporting Taxpayer starting on January 1, 2021 and lasting less than 12 months (for example, due to an ‘acquisition of control’ transaction), the due date for filing Form T1134 may arise even earlier.
The following additional disclosure requirements were introduced to enhance the CRA’s audit assessments and are expected to significantly increase the compliance burden of completing Form T1134:
Disclosure on dormant / inactive FAs – the new rules require a Form T1134 Summary to be filed with basic information concerning the FA, whereas in prior years Form T1134 was not required for a dormant / inactive FA.
Tracking interest requirements – revised Form T1134 requires additional disclosures and unconsolidated financial statements to be filed in respect of a ‘tracking interest’ under the Tracking Arrangement rules of the Act.
FA Dumping (FAD) rules, Upstream Loan rules – several points of disclosure are now required regarding these provisions in Form T1134. This includes whether certain exceptions to rules apply, such as the more closely connected business exception to the FAD rules, or whether any upstream loans have been otherwise offset by downstream FA surplus.
Adjusted Cost Base (ACB) of common and preferred shares – information regarding the ACB of common and preferred share investments in FAs including changes during the year, is now required to be disclosed in Form T1134.
Breakdown of gross revenue for controlled FAs – in addition to requiring the source of gross revenue (e.g., interest, dividends etc.) as in prior years, revised Form T1134 requires disclosing whether each such revenue is from arms-length and non-arms-length sources. Gross revenue amounts that are not identified as being from arm’s length sources will be considered to be from non-arm's length sources.
Additional Foreign Accrual Property Income (FAPI) disclosures – Form T1134 now contains additional detailed questions regarding FAPI, including Foreign Accrual Property Losses (FAPL) and Foreign Accrual Capital Losses (FACL).
Lower-tier non-controlled FAs – a new section in the T1134 Summary requires certain information for non-controlled FAs indirectly held through one or more other non-controlled FAs. Reporting in respect of such lower-tier FAs was not required in prior years.
Reorganizations and surplus accounts – although these sections were in the previous version of Form T1134, the revised version requests additional details regarding tax-deferred reorganizations, such as FA liquidations, mergers, and share exchanges.
Fines and Penalties
Failure to comply with these requirements may result in significant penalties. Reporting Taxpayers who fail to meet the filing deadline are subject to a penalty of $25 per day, with a minimum penalty of $100 and a maximum of $2,500 for each late-filed T1134 Supplement, or each late-filed T1134 Summary where all FAs are dormant / inactive. Moreover, if the Reporting Taxpayer fails to file—either knowingly or due to gross negligence—the penalty is $500 a month to a maximum of $12,000. These amounts are doubled when the CRA has issued a demand to file a return. After 24 months, the total penalty is 5% of the cost of the shares and indebtedness of the FA.
If the Reporting Taxpayer—either knowingly or due to gross negligence—makes false statements or omissions in an information return, the penalty is the greater sum of either $24,000 or 5% of the cost of the shares and indebtedness of the FA.
The revised Form T1134 instructions state that each of the related Reporting Taxpayers involved in a joint filing remain responsible for non-filed, incorrect, or incomplete returns, and penalties will apply “as if that entity filed the returns on its own.”
What do you need to do?
Revised Form T1134 requires Reporting Taxpayers to be more diligent in tracking relevant Canadian tax attributes regarding their FAs (i.e., surplus, FAPI, and ACB) and to complete and file the form with the CRA sooner than in previous years. There are potentially significant penalties if it’s filed late or incorrectly. Thus, it’s important for Reporting Taxpayers to promptly file the revised Form T1134.
These changes can be complex—but you aren’t alone. If you need support preparing your Form T1134, we can help you navigate the new requirements. Contact your local advisor or reach out to us here.
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