9 July 2026 External T.I. 2026-1090151E5 - GMTA - Fiscal years and Part 3 return filing obligations of JV entities

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: For an entity (USCA JV) that is a JV entity in respect of two qualifying MNE groups, Group CA and Group US, with ultimate parent entities, CanParentCo and USParentCo, respectively: 1) What is the first fiscal year of USCA JV that is subject to Part 2 or Part 3 of the GMTA? 2) Is USCA JV required to file a Part 3 return under subsection 61(2) of the GMTA, regardless of whether it has any Part 3 tax payable? 3) Can USCA JV file a single Part 3 return in respect of both Group CA and Group US? When is a Part 3 return for USCA JV due? 4) Can a Canadian filing entity file Part 3 returns on behalf of USCA JV?

Position: 1) The first fiscal period of USCA JV that is subject to Part 2 or Part 3 of the GMTA is its fiscal year from November 1, 2023 to October 31, 2024, as it ends within Group US' fiscal year ended December 31, 2024. 2) If USCA JV does not have Part 3 tax payable in respect of an MNE group for a fiscal year, it is generally not required to file a Part 3 return in respect of that MNE group for that fiscal year. 3) A Part 3 return should be filed in respect of USCA JV in relation to each of Group CA and Group US. A Part 3 return for USCA JV is due on the GIR due date for Group CA or Group US, as applicable, and as determined with respect to CanParentCo and USParentCo, respectively. 4) Yes.

Reasons: 1) Subsections 35(1) and 3(1). 2) See 2026-1088301E5. 3) Subsection 61(2) and definition of "GIR due date" in subsection 55(1). 4) Subsections 61(3) and (4).

XXXXXXXXXX 2026-109015
J. Fung, CPA, CA

July 9, 2026

Dear XXXXXXXXXX:

Re: Fiscal years and filing obligations of joint venture entities for the purposes of the Global Minimum Tax Act

This letter is in reply to your request, dated February 13, 2026, for interpretative assistance with respect to the fiscal years and Part 3 return filing obligations for joint venture (“JV”) entities for the purposes of the Global Minimum Tax Act (“GMTA”).

This technical interpretation provides general comments about the provisions of the GMTA as currently enacted. It does not confirm the tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.

Unless otherwise stated, all statutory references herein are references to the GMTA.

Reference is also made to the model rules set out in the document entitled Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two) (the “GloBE Model Rules”) published by the Organisation for Economic Co-operation and Development (“OECD”) on December 20, 2021 and the commentary entitled Tax Challenges Arising from the Digitalisation of the Economy – Commentary to the Global Anti-Base Erosion Model Rules (Pillar Two), published by the OECD on March 14, 2022, as amended from time to time (the “GloBE Commentary”).

Facts and assumptions

You have provided the following facts and assumptions as context for your questions:

1. An entity located in Canada (“CanParentCo”) holds 50% of the issued and outstanding shares of a corporation (“USCA JV”). The remaining 50% of the USCA JV shares are indirectly held by an entity located in the USA (“USParentCo”) through its wholly-owned subsidiary located in Canada (“CanCo”).

2. USCA JV is located in Canada for the purposes of the GMTA.

3. CanParentCo is the ultimate parent entity (“UPE”) of Group CA, and USParentCo is the UPE of Group US. Both Group CA and Group US are qualifying multinational enterprise (“MNE”) groups.

4. USCA JV is a JV, as defined in subsection 2(1) of the GMTA, in respect of both Group CA and Group US.

5. USCA JV does not have any subsidiaries.

6. CanParentCo and USCA JV both have a fiscal year-end of October 31, while USParentCo and CanCo have a fiscal year-end of December 31.

7. CanParentCo prepares consolidated financial statements for Group CA based on an October 31 fiscal year-end, and USParentCo prepares consolidated financial statements for Group US based on a December 31 fiscal year-end.

8. USCA JV’s financial results are reported under the equity method in the consolidated financial statements of both CanParentCo and USParentCo.

9. All relevant financial statements are prepared under an acceptable financial accounting standard.

10. CanParentCo, USParentCo, CanCo, and any entities in the ownership chain holding USCA JV are not considered “excluded entities” under the GMTA.

Questions

1. What is the first fiscal year of USCA JV that is subject to Part 2 or Part 3 of the GMTA?

2. Is USCA JV required to file a Part 3 return under subsection 61(2) of the GMTA, regardless of whether it has any Part 3 tax payable?

3. Can USCA JV file a single Part 3 return in respect of both Group CA and Group US? When is a Part 3 return for USCA JV due?

4. Can a Canadian filing entity file Part 3 returns on behalf of USCA JV?

CRA Response

General Comments

Except under specific provisions, a JV entity in respect of an MNE group is not a constituent entity (“CE”) of the particular MNE group for the purposes of the GMTA, because its financial results are reported under the equity method in the consolidated financial statements of the UPE of that MNE group.

Under subsections 35(2) and 52(2), a JV entity is treated as a CE of a particular MNE group for the purposes of certain provisions, including subsections 35(1) and 52(1). These provisions provide the rules for determining the Part 2 top-up amount and Part 3 domestic top-up amount of a JV entity. Under subsection 52(1), the rules for determining the domestic top-up amount of a JV entity under Part 3 refer to the rules for determining the top-up amount of the JV entity in subsection 35(1) of Part 2.

On a related matter and as you have also determined, based on the definition of “joint venture” in subsection 2(1), it is possible for a particular entity to be a JV entity in respect of two separate MNE groups where the UPE of each MNE group holds, directly or indirectly, 50% of the ownership interests in the entity.

It is important to note that, although subsection 51(1) requires a particular person to pay Part 3 tax “in respect of a CE of an MNE group for a fiscal year in an amount equal to the domestic top-up amount of the CE for the fiscal year”, CRA does not interpret that provision to mean that a particular entity, that is a JV entity in respect of two separate qualifying MNE groups, is required to pay the total amount of Part 3 tax in respect of its particular fiscal year for each MNE group. In our view, the total amount of Part 3 tax payable in respect of a particular JV entity for a particular fiscal year of the JV group should not exceed the JV entity’s domestic top-up amount for that fiscal year. These comments are limited to the case where the particular Canadian entity is a JV entity in respect of each relevant qualifying MNE group and is not otherwise a CE of either group.

CRA Response to Question 1

In general terms, subsection 35(1) operates by referencing the top-up amount calculations for standard CEs in subsection 30(1), minority-owned CEs in subsection 34(2), and investment subgroup entities in subsection 36(2), with a “read-as rule” that modifies such calculations to apply to JV entities:

35. (1) Joint venture top-up amount The top-up amount of a joint venture entity of a joint venture group, in respect of a particular MNE group, for a fiscal year is the amount that would be determined under subsection 30(1), 34(2) or 36(2), if

(a) all references in Divisions 2 and 3, Subdivisions A to E, G and H of this Division, Divisions 5 to 7 and Subdivision B of Division 8 to

(i) “MNE group” and “ultimate parent entity” were read as references to “joint venture group” and “joint venture”, respectively, and

(ii) “standard constituent entity” and “constituent entity” were read as references to “joint venture entity”;

[…]

(d) for the purposes of this subsection, any other modifications were made to Part 1 and Divisions 2 and 3, this Division, Divisions 5 to 7, Subdivision B of Division 8 and Subdivision A of Division 9 of this Part as the context requires.

The term “fiscal year” is used within the preamble of subsection 35(1), but also within the provisions that subsection 35(1) refers to. For example, subsection 30(1) establishes the top-up amount of a standard CE of an MNE group that is located in a jurisdiction for a fiscal year.

“Fiscal year” is a defined term in subsection 2(1):

“fiscal year”, in respect of an MNE group, means

(a) if paragraph (d) of the definition “consolidated financial statements” in this subsection applies in respect of the ultimate parent entity, the calendar year; and

(b) in any other case, an accounting period for which the ultimate parent entity of an MNE group prepares its consolidated financial statements.

If the UPE of an MNE group prepares consolidated financial statements that are in accordance with an acceptable financial accounting standard, as is the case in the facts you have presented, paragraph (d) of the definition of “consolidated financial statements” in subsection 2(1) will not apply, and the “fiscal year” of an MNE group will be the accounting period for which its UPE prepares its consolidated financial statements.

Because the “read-as” rule in paragraph 35(1)(a) does not extend to Part 1 of the GMTA, references to “MNE group” and “ultimate parent entity” in the definition of “fiscal year” in subsection 2(1) are not altered by that rule. However, for purposes of applying subsection 35(1), paragraph 35(1)(d) requires making any other modifications to certain listed provisions “as the context requires”. Accordingly, if it is determined that the context requires a particular rule or definition to be altered to give effect to the top-up amount calculation in subsection 35(1), such modification will have to be made for purposes of determining the top-up amount of a JV entity with respect to a particular MNE group.

The interpretative clause in subsection 3(1) states that certain provisions of the GMTA, including subsection 35(1) in Part 2, should be interpreted in a manner that is consistent with specific external sources, such as the GloBE Commentary.

Paragraph 13.7 of the GloBE Commentary to Article 1.1.1 of the GloBE Model Rules states:

13. 7. The GloBE Rules apply based on the Fiscal Year of the UPE. Where the financial accounts of a Constituent Entity are maintained on a fiscal year different from the UPE’s Fiscal Year and are not included in the Consolidated Financial Statements, the GloBE computations for the Constituent Entity’s Fiscal Year must be made based on the financial accounting period that ends during the UPE’s Fiscal Year. Similarly, where a Joint Venture or JV Group’s financial accounts are maintained on a different fiscal year, the GloBE computations for the Joint Venture or JV Group’s Fiscal Year must be made based on the financial accounting period that ends during the UPE’s Fiscal Year. This will ensure that the data necessary to determine the MNE Group’s Top-up Tax liability, if any, for a Reporting Fiscal Year is available when the GloBE Information Return for that Reporting Fiscal Year is due.

(underlining added for emphasis)

It is our view that, in order to give effect to the interpretative rule in subsection 3(1) and the modifying rule in paragraph 35(1)(d), subsection 35(1) should be read in a way that is consistent with these comments. Accordingly, the CRA considers that, for purposes of applying subsection 35(1), a reference to a “fiscal year” in any of the provisions mentioned in the preamble of subsection 35(1) (i.e., subsections 30(1), 34(2) and 36(2)) or in those mentioned in paragraphs 35(1)(a), (b) or (c), should be read to mean the fiscal year of the JV group that ends during the relevant UPE’s fiscal year.

Additionally, in light of the reference to subsection 35(1) in subsection 52(1), the same fiscal year should be used for purposes of determining the domestic top-up amount of a JV entity in respect of an MNE group.

In short, it is our view that, for GMTA purposes, where the fiscal year of a JV entity in respect of an MNE group is different from the fiscal year of the UPE of that MNE group, the computation of the top-up amount of the JV entity must be based on the fiscal year of the JV group that ends during the UPE’s fiscal year. The computation of the domestic top-up amount of a JV entity in respect of an MNE group should also be based on the same fiscal year.

Given the above, and the fact that the GMTA applies to fiscal years of a qualifying MNE group that begin on or after December 31, 2023 (footnote 1), it is our view that, in the scenario that you have provided, the first fiscal year of USCA JV that would potentially give rise to a top-up amount or domestic top-up amount in respect of an MNE group would be its fiscal year from November 1, 2023 to October 31, 2024. This is because that particular fiscal year is the fiscal year of USCA JV that ends during USParentCo’s fiscal year ended December 31, 2024 (i.e., the earliest fiscal year-end of a fiscal year of CanParentCo or USParentCo that begins after December 31, 2023).

CRA Response to Question 2

Under subsection 61(2), a person must file a Part 3 return for a fiscal year if that person is liable to pay Part 3 tax for that fiscal year.

Under subsection 51(1), a person is required to pay Part 3 tax in respect of a CE of a qualifying MNE group, in the amount of the “domestic top-up amount” of that CE for a fiscal year, if certain conditions are met. Accordingly, and in conjunction with the rule in subsection 52(2), a particular entity that is a JV entity in respect of a qualifying MNE group may have Part 3 tax payable and may be required to file a return under subsection 61(2) in respect of that MNE group.

Where a domestic top-up amount is computed for a JV entity in respect of an MNE group, it is our view that the fiscal year referred to in subsection 61(2) is the fiscal year of the UPE of the MNE group. Accordingly, if USCA JV has no Part 3 tax payable for a fiscal year of Group CA, it is not required to file a Part 3 return in respect of Group CA for that fiscal year. The same applies for USCA JV’s Part 3 return filing obligations in respect of Group US.

This conclusion does not limit the Minister’s authority under section 62 to require a return in an appropriate case.

For further discussion on the meaning of “liable to pay tax” in the context of applying subsection 61(2), please refer to our response in Technical Interpretation 2026-1088301E5.

CRA Response to Question 3

As mentioned above, under subsection 61(2), a person is required to file a Part 3 return for a fiscal year, on or before the GIR due date, if that person has Part 3 tax payable for that fiscal year.

Where a particular entity is a JV entity in respect of more than one qualifying MNE group, it may have Part 3 tax payable in respect of more than one MNE group for a particular fiscal year of the JV group to which it belongs. In such instances, it is our view that subsection 61(2) requires the filing of a return in respect of the JV entity for each qualifying MNE group. Such returns must be filed by the “GIR due date”, which is defined in subsection 55(1):

“GIR due date”, in respect of a qualifying MNE group for a fiscal year, means the later of

(a) June 30, 2026; and

(b) the day that is

(i) 18 months after the last day of the fiscal year, if the fiscal year is the earlier of

(A) the first fiscal year for which a constituent entity of, or joint venture entity in respect of, the MNE group that is located in Canada is subject to Part 3, and

(B) the first fiscal year that a constituent entity of, or joint venture entity in respect of, the MNE group is subject to a qualified IIR or qualified UTPR; and

(ii) 15 months after the last day of the fiscal year, in any other case.

(underlining added for emphasis)

Based on the definition of “fiscal year” in subsection 2(1), clause (b)(i)(A) means the first fiscal year of the UPE of the MNE group in which any of the CEs or JV entities in that MNE group are subject to Part 3. Clause (B) would be read in a similar manner, and the reference to “fiscal year” in subparagraph (b)(ii) would be read as a reference to a fiscal year of the UPE of the MNE group. It is worth noting that the “read-as” rules in paragraph 35(1)(a) and (d) do not apply to Part 5 of the GMTA and, as such, do not alter the definition of “fiscal year” in subsection 55(1).

Accordingly, it is our view that while the top-up amount and domestic top-up amount in respect of a JV entity of a particular MNE group must be computed by reference to the JV’s fiscal year that ends during the fiscal year of the UPE of that MNE group, the due date for the Part 3 return in respect of a particular JV entity of an MNE group would be the GIR due date of that particular MNE group.

In your example, because USCA JV is considered a JV entity of both Group CA and Group US, each of which is a qualifying MNE group, Part 3 returns may need to be filed on or before the GIR due date of each of the MNE groups.

For Group US’ first fiscal year subject to the GMTA, ended December 31, 2024, the GIR due date is the later of June 30, 2026 and the day that is 18 months after December 31, 2024, which is also June 30, 2026.

For Group CA’s first fiscal year subject to the GMTA, ended October 31, 2025, the GIR due date is April 30, 2027, being the later of June 30, 2026 and 18 months after October 31, 2025. For subsequent fiscal years of Group CA and Group US, their GIR due dates would be 15 months after the last day of their respective fiscal years. For example, the GIR due date for Group US’ second fiscal year, ended December 31, 2025, would be March 31, 2027, and for Group CA’s second fiscal year, ended October 31, 2026, would be January 31, 2028.

CRA recognizes that the application of subsection 61(2) to entities that are JV entities in respect of more than one qualifying MNE group may lead to duplicate Part 3 filing obligations in respect of the same domestic top-up amount for a particular fiscal year of the JV entity. Where this poses a practical challenge for a particular MNE group or JV entity, or for additional details on how to file such Part 3 returns, we recommend contacting the CRA through the online webform located at https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/global-minimum-tax/contact.html.

CRA Response to Question 4

If another person resident in Canada that is required to file a Part 3 return in Canada for Group CA or Group US, as the case may be, files a Part 3 return on or before the GIR due date indicating that it is the Canadian filing entity (footnote 2) for that group for a fiscal year, then in accordance with subsection 61(4), USCA JV will be deemed to have filed a Part 3 return in respect of that MNE group for the same fiscal year. Effectively, a JV entity located in Canada can be relieved of its Part 3 filing obligation in respect of an MNE group for a fiscal year if a Canadian filing entity is designated to file, and files, a Part 3 return for that MNE group for that fiscal year.

We trust our comments will be of assistance.

Yours truly,

Charles Dumas
Section Chief
For Division Director
Specialty Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

FOOTNOTES

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

1. Budget Implementation Act, 2024, No. 1 (S.C. 2024, c.17), subsection 81(2).

2. As defined in subsection 61(3).