CRA indicates that once a Canadian corp has even a fleeting direct equity percentage in an FA, a T1134 reporting obligation is triggered (subject to group-filing relief) for that year

On April 30, 2025, Canco rolled transferred all its shares of USCo under s. 85(1) to a newly-formed Canadian holding company (Holdco). Holdco, like Canco, had a June 30 year-end. On May 1, 2025, USCo was liquidated into Holdco so that Holdco now US LLC, directly.

CRA noted that if a Canadian corporation has a direct equity percentage in a given foreign affiliate at any point during a year, it is required to file a T1134 return for that foreign affiliate. Accordingly, as both Canco and Holdco directly held the shares of USCo in their June 30, 2025 taxation years, both were reporting entities and required to file T1134 returns for those taxation years.

However, assuming that they met the conditions for administrative relief in this regard (i.e., they were members of a related group of reporting entities who filed their tax returns in Canadian dollars (or in the same functional currency) and had the same fiscal year-end) , they could designate either one of them to file a single T1134 as their representative.

CRA also noted that the organizational structure that must be reported in the T1134 is the one as it existed at the end of the reporting taxpayer's taxation year.

Neal Armstrong. Summary of 2 December 2025 CTF Roundtable, Q.3 under s. 233.4(2)(a).