26 November 2013 External T.I. 2013-0508931E5 - Form T1134

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: 1. Whether the return referred to in subsections 233.3(3) and 233.4(4) of the Act is a "return of income" for the purposes of the coming into force provisions for subsection 94(3) of the Act; and
2. Assuming a Trust's Taxation Year ends on December 31, 2012, on or before the later of what date must Form T1134 be filed with the MNR by a 94(3) Trust in order for it to be considered to have been filed on a timely basis for the purposes of section 233.4 of the Act and determining the amount of any late filing penalty payable in respect of that year?

Position: 1.No. Forms T1134 and T1135 are information returns and not returns of income for the purposes of the coming into force provisions for subsection 94(3) of the Act. 2. Form T1134 must be filed with the MNR on or before March 31, 2014.

Reasons: See the Explanatory Notes to section 94 of the Act, which discuss the coming into force provisions.

XXXXXXXXXX
2013-050893
Angelina Argento

November 26, 2013

Dear XXXXXXXXXX,

Re: Forms T1134 and T1135 and the Coming into Force ("CIF") Provisions for Subsection 94(3)

We are writing in response to your email dated October 18, 2013 wherein you describe the following hypothetical scenario:

1. a non-resident discretionary trust ("Trust") is deemed to be resident in Canada throughout a particular taxation year ("Taxation Year") pursuant to subsection 94(3) of the Income Tax Act ("Act") for certain purposes of the Act;

2. the Trust is a "reporting entity" within the meaning of subsection 233.4(1) and is required by subsection 233.4(4) of the Act to file with the Minister of National Revenue ("MNR"), Form T1134 "Information Return Relating to Controlled and Not-Controlled Foreign Affiliates", within 15 months after the end of its Taxation Year; and

3. the Trust is a "reporting entity" within the meaning of subsection 233.3(1) of the Act and is required by paragraph 233.3(3)(b) of the Act to file with the MNR, Form T1135, "Foreign Income Verification Statement" on or before the day that is the Trust's "filing due date" (as that term is defined in subsection 248(1) of the Act) for the year.

You note that section 94 of the Act was substantially amended by Bill C-48, which received Royal Assent on June 26, 2013 (footnote 1). The amendments to section 94 of the Act generally apply to trust taxation years that end after 2006, however, in certain circumstances, the CIF provisions for section 94 of the Act (footnote 2) postpone the filing deadline for Form T1134 and Form T1135. In particular, the CIF provisions (footnote 3) for section 94 of the Act state as follows:

"(c) if
(i) an election or form referred to in section 94 of the Act, as enacted by subsection (1), would otherwise be required to be filed before 120 days after the day on which this Act receives royal assent (i.e. before October 24, 2013), it is deemed to have been filed with the Minister of National Revenue on a timely basis if it is filed with the Minister of National Revenue within 365 days after the day on which this Act receives royal assent (i.e. June 26, 2014), and
(ii) a trust's return of income for a taxation year throughout which it was deemed by subsection 94(3) of the Act, as enacted by subsection (1), to be resident in Canada for the purpose of computing its income (or was deemed by paragraph 94(3)(f) of the Act, as enacted by subsection (1), to exist) would otherwise be required to be filed before 120 days after the day on which this Act receives royal assent (on or before October 24, 2013), it is deemed to have been filed, for the purposes of section 162 of the Act, with the Minister of National Revenue on a timely basis if it is filed with the Minister of National Revenue within 365 days after the day on which this Act receives royal assent (i.e. June 26, 2014), (however, this subparagraph does not apply in respect of a return of income for a taxation year that ends before the day on which this Act receives royal assent and for which the trust was deemed resident in Canada by section 94 of the Act as it read without reference to this Act)."

You ask us the following questions:

1. can the above CIF provisions affect the deadline for the filing of Forms T1134 and T1135 by the Trust; and

2. assuming the Trust's Taxation Year ends on December 31, 2012, on or before the later of what date must Form T1134 be filed with the MNR in order to be considered to have been filed on a timely basis for the purposes of section 233.4 of the Act and determining the amount of any late filing penalty payable in respect of that year?

Our Comments

This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.

Subparagraph 94(3)(a)(vi) of the Act states as follows:

"If at a specified time in a trust's particular taxation year (other than a trust that is, at that time, an exempt foreign trust) the trust is non-resident (determined without reference to this subsection) and, at that time, there is a resident contributor to the trust or a resident beneficiary under the trust,
(a) the trust is deemed to be resident in Canada throughout the particular taxation year for the purposes of
(vi) determining an obligation of the trust to file a return under section 233.3 or 233.4."

The "return" referred to in subsection 233.4(4) of the Act (i.e., Form T1134) and subsection 233.3(3) of the Act (i.e., Form T1135) is not a "return of income" (i.e., it is an information return). However, both the T1134 and T1135 are "forms" for the purposes of the CIF provisions for section 94. Therefore the CIF provisions would extend the filing deadline for Form T1134 by the Trust if it were otherwise due before October 24, 2013. Similarly, if Form T1135 were otherwise due before October 24, 2013, the CIF provisions would extend the filing deadline by the Trust to June 26, 2014.

If the Trust's Taxation Year ends on December 31, 2012, pursuant to subsection 233.4(4) of the Act, the Trust is required to file Form T1134 with the MNR within 15 months after the end of its Taxation Year (i.e., by March 31, 2014). Since Form T1134 was not due on or before October 24, 2013, the filing deadline for that form by the Trust is unaffected by the above CIF provisions and remains March 31, 2014.

We trust these comments to be of assistance.

Yours truly,

Olli Laurikainen, CPA, CA
For Director
International Division
Income Tax Rulings Directorate

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 S.C. 2013, c. 34.
2 Clause 7 of the Technical Tax Amendments Act, 2012.
3 Sub-clauses 7(2)(c)(i) and 7(2)(c)(ii) of the Technical Tax Amendments Act, 2012.