Canadian and international tax

Minato Tax Solutions Inc. offers comprehensive tax advisory and compliance services, including preparing Canadian tax returns, tax treaty analysis, support during tax audits, and tax planning for individuals and corporations — and more. Our expertise also encompasses cross-border tax matters, cryptocurrencies, departure and residency questions, and specialized returns such as the T1134 and T1135 forms.

International tax compliance in Canada encompasses all obligations aimed at ensuring that taxpayers — residents and non-residents — comply with Canadian tax rules regarding income, foreign assets, and cross-border transactions. It is designed to prevent tax evasion, ensure transparency, and enable exchange of information with other tax administrations. Most commonly, this includes filing forms such as:

• T1134 — Information Return Relating to Controlled and Non-Controlled Foreign Affiliates
• T1135 — Foreign Income Verification Statement
• T106 — Reporting of Non-Arm's Length Transactions with Non-Residents

These reporting obligations apply even if no tax is payable: whether or not a tax balance is owing is a separate matter from the obligation to file these information returns when required by law.

Form T1135 must be filed by any Canadian-resident taxpayer (individual, corporation, trust, or certain partnerships) who is not expressly exempt by law and who held, at any point during the tax year, one or more "specified foreign property" (as defined under the Income Tax Act) with a total cost exceeding $100,000 CAD. The form discloses the nature, location, cost, value, and income generated by these foreign assets — even if no tax is owing on them.

Typically reportable assets include:

• Funds held outside Canada
• Shares of non-resident corporations (other than "foreign affiliates" within the meaning of s. 233.4 ITA)
• Indebtedness owed by non-residents
• Interests in non-resident trusts
• Real property located outside Canada (excluding personal-use property and real estate used in an active business)
• Other foreign property (including foreign life insurance policies, precious metals, foreign fund units, options, etc.)
• Specified foreign property held in an account with a Canadian registered securities dealer or a Canadian trust company

Penalties for failure to file or late filing are significant (non-exhaustive list for federal purposes):

• For an ordinary failure to file, the penalty is the greater of $100 and $25 per day for up to 100 days, to a maximum of $2,500.
• If the failure is made knowingly or in circumstances amounting to gross negligence, the penalty is $500 per month of delay, up to 24 months (maximum $12,000), less any penalties already imposed by subsection 162(7) I.T.A..
• Where a formal demand to file has been issued and the person, knowingly or in circumstances amounting to gross negligence, fails to comply, the penalty is $1,000 for each month the return is late (up to $24,000), less any penalties already imposed by subsection 162(7) I.T.A..
• If the delay exceeds 24 months in the context of gross negligence or wilful default, an additional penalty of 5% of the cost of the specified foreign property may apply for each tax year at issue, reduced by penalties already payable under subsections 162(7) and 162(10) I.T.A..
• Additional penalties may apply for misrepresentation or deliberate omission of information.

For tax years ending after December 30, 2025, any taxpayer (individual, corporation, or trust) or any partnership residing in Québec that, in a given tax year or fiscal period, holds specified foreign property with a total cost exceeding $100,000 CAD at any point during that year or period, will also be required to file the new Form TP-1079.8.BE — Declaration Relating to the Holding of Foreign Property — which must be submitted to Revenu Québec no later than the filing deadline for their income or information return for the relevant year or fiscal period. The penalties for failure to file or late filing are significant and are in addition to the federal penalties listed above.

Form T1134 ("Information Return Relating to Controlled and Non-Controlled Foreign Affiliates") must be filed by any Canadian-resident taxpayer (individual, corporation, trust, or certain partnerships) who, at any point during the tax year, held an interest in a "foreign affiliate."

Generally, a foreign affiliate is a non-resident corporation in which the Canadian taxpayer holds at least 1% equity interest and, together with related persons (within the meaning of the ITA), holds at least 10% of equity interest at any point during the year.

The T1134 form requires information about each foreign affiliate, including ownership details and financial information, whether controlled or non-controlled. This reporting obligation applies even if no Canadian tax is payable in respect of those entities.

For taxation years or fiscal periods beginning after 2020, Form T1134 is due 10 months after your year-end.

Penalties for failure to file or late filing:

• For an ordinary failure to file, the penalty is the greater of $100 and $25 per day for up to 100 days, to a maximum of $2,500.
• If the failure is made knowingly or in circumstances amounting to gross negligence, the penalty is $500 per month of delay, up to 24 months (maximum $12,000), reduced by any ordinary late-filing penalty already assessed.
• If the failure continues for more than 24 months in a case involving knowing non-compliance or gross negligence, an additional penalty may apply equal to 5% of the greatest total cost amount at any time in the year of the taxpayer's shares of, and debts owing by, the foreign affiliate, reduced by penalties already payable under the earlier rules.
• Additional penalties may apply for misrepresentation or deliberate omission of information.

These reporting obligations apply even if no tax is payable: whether or not a tax balance is owing is a separate matter from the obligation to file Form T1134 when required by law.

Generally, Foreign Accrual Property Income (FAPI) refers, under the Income Tax Act, to certain types of passive income or investment income or income requalified as such, and also interest, dividends, rents, royalties, and certain capital gains, earned by a foreign affiliate (FA) of a Canadian-resident taxpayer, subject to detailed statutory rules and adjustments. In general, FAPI is included in a Canadian taxpayer's income under subsection 91(1) in respect of a controlled foreign affiliate.

When a CFA of a Canadian resident earns FAPI in a foreign jurisdiction, the taxpayer's participating percentage of that FAPI must be included in their taxable income for the year in which it is earned by the CFA — even if that income has not been paid as a dividend.

The calculation of FAPI requires a detailed analysis of the foreign entity's income and losses, as well as underlying foreign taxes paid, which may give rise to a deduction. This regime is complex and requires expertise in both Canadian and international tax law, as well as an understanding of the tax rules in the relevant foreign jurisdiction. The rules are complex and professional advice is recommended.

No. Minato Tax Solutions Inc. focuses on Canadian and international taxation. The firm does not provide U.S. tax compliance services (such as U.S. individual or corporate returns, LLC filings, or FBAR filings).

That said, Minato Tax regularly advises clients on Canada–U.S. tax implications — including treaty applications, cross-border structuring, and withholding tax analysis in a Canadian context.

The CRA's Voluntary Disclosures Program (VDP) allows a taxpayer to correct past errors or omissions in tax matters administered by the CRA. If relief is granted, the taxpayer must still pay the tax owing, but may receive relief from certain penalties and a portion of the interest, and may also obtain protection from criminal prosecution in respect of the disclosed matters.

To be eligible, the application must generally:

• be voluntary;
• relate to at least one tax year whose filing due date is at least one year past;
• involve an error or omission giving rise to interest, penalties, or both;
• include all relevant information and supporting documentation; and
• include payment of the estimated tax owing, or a request for a payment arrangement, if applicable.

The taxpayer must disclose all known errors and omissions. Generally, supporting documentation must be provided for the six most recent years, and if the errors or omissions relate to assets or income located outside Canada, the period is generally extended to ten years. The CRA may also request additional years where appropriate.

Since October 1, 2025, the CRA distinguishes between unprompted and prompted applications. As a general rule:

• an unprompted application is normally eligible for 75% relief on applicable interest and 100% relief on applicable penalties;
• a prompted application is normally eligible for 25% relief on applicable interest and up to 100% relief on applicable penalties.

An application will generally not be considered voluntary if an audit or investigation has already been initiated against the taxpayer or a related taxpayer in respect of the disclosed information.

Certain applications are generally not eligible, including those seeking only a refund, those with no tax or penalty exposure, those seeking relief from penalties or interest already assessed, certain applications relating to tax elections, matters involving an insolvency event, matters covered by an advance pricing arrangement, and matters depending on competent authority discretion under a tax treaty.

Québec also administers a separate voluntary disclosure program through Revenu Québec for provincial tax obligations. Minato Tax Solutions Inc. helps clients assess eligibility under the VDP, prepare complete disclosures, and manage the process to bring their tax affairs into compliance.

Minato Tax Solutions Inc. serves individuals, corporations, estates, trusts, and entrepreneurs in managing their tax obligations and analysing their existing corporate and investment structures, in Canada and internationally, in light of their specific circumstances and objectives.

The firm provides advice on a wide range of tax matters, offering tailored analysis adapted to each situation, whether in a purely Canadian context or where cross-border elements are involved.

It has particular expertise in international taxation, notably where assets, investments, or corporate holdings span multiple jurisdictions.

For more complex mandates, such as corporate reorganizations, Minato Tax Solutions Inc. collaborates with other specialized firms, contributing a coordinated tax and strategic perspective.

The firm also works closely with accounting firms, law firms, and other professionals, including financial planners and notaries, in a collaborative spirit, whether through joint engagements, specialized advisory support, or referral arrangements.

It is strongly recommended to consult an international tax advisor before undertaking any significant cross-border transaction — such as establishing a foreign subsidiary, acquiring assets abroad, reorganizing a corporate structure, or implementing an international mobility plan. Proactive tax planning helps anticipate issues, optimize the structure of transactions, and reduce the risk of non-compliance or double taxation — while avoiding costly retroactive corrections.

That said, Minato Tax Solutions Inc. also assists clients in managing existing structures or addressing past non-compliance, offering thorough analysis and tailored solutions adapted to each situation.

For Canadian tax purposes, the distinction between resident and non-resident is fundamental. A person who is resident in Canada is generally subject to Canadian tax on their worldwide income for the period during which they are considered a Canadian tax resident. Conversely, a non-resident is generally subject to Canadian tax only on certain Canadian-source income.

A person may be either a factual resident or a deemed resident of Canada. This distinction matters because it determines why the person is treated as a resident under Canadian tax law.

You generally become a factual resident of Canada when you establish significant residential ties with Canada. The most important ties are typically a dwelling in Canada, the presence in Canada of a spouse or common-law partner, and dependants. Other secondary ties may also be relevant, such as Canadian bank accounts, a Canadian driver's licence, provincial health insurance coverage, personal property, or social and economic connections in Canada. In Thomson, the Supreme Court of Canada explained that residence depends on the degree to which a person settles into or maintains their ordinary mode of living in a given place, and the CRA's published guidance reflects that fact-specific approach.

Factual residence is always a question of fact. It does not depend on a single criterion or on immigration status alone. All circumstances must be examined, including the duration of the stay, its purpose, the individual's intention, and the continuity of their ties with Canada and abroad.

A person may also be a deemed resident of Canada without being a factual resident. The most common situation is that of an individual who has not established sufficient residential ties to qualify as a factual resident, but who sojourns in Canada for 183 days or more in the year. In that case, paragraph 250(1)(a) deems the person to have been resident in Canada throughout the taxation year. Other categories of deemed residents also exist, including certain members of the Canadian Forces, certain government personnel, and certain individuals serving under prescribed international development assistance programs.

Finally, even if a person would otherwise be a factual or deemed resident of Canada, they may be deemed a non-resident of Canada if an applicable tax treaty treats them as resident in the other country and not resident in Canada. In that case, subsection 250(5) applies.

The main tax consequences of immigrating to Canada are as follows: from the date you become resident in Canada for tax purposes, you are generally subject to Canadian tax on your worldwide income, including income from both Canadian and foreign sources. For the portion of the year prior to that date, you are generally taxed as a non-resident — that is, only on certain Canadian-source income as specified under the Act.

In addition, upon becoming a Canadian resident, the Act generally provides for a step-up in the tax cost of most of the assets you hold to their fair market value at that date subject to statutory exclusions. This generally has the effect of limiting Canadian tax to gains that accrued after your arrival in Canada. However, this rule does not apply to certain excluded property such as taxable Canadian property, inventory of a business carried on in Canada, Class 14.1 property in respect of a business carried on in Canada, and certain excluded rights or interests.

When you cease to be a Canadian tax resident, you are generally deemed to have disposed of most of your assets at fair market value immediately before your departure, which may trigger departure tax on accrued gains ("exit tax"). Certain categories of property are excluded, such as: real or immovable property situated in Canada, Canadian resource property, and timber resource property; capital property used in, Class 14.1 property in respect of, or inventory of, a business carried on through a permanent establishment in Canada; excluded rights or interests; certain property of short-term residents under the 60-month/120-month rule; and certain property covered by an election for returning former residents.

You must file a tax return for the year of departure. In addition, if the total fair market value of your reportable property exceeds $25,000 at the time of departure, you must generally file Form T1161 to declare such property, subject to the exclusions provided under the Act.

Yes, a non-resident may continue to hold assets or investments in Canada for tax purposes. However, income generated by those assets (rental income, dividends, interest, etc.) will generally be subject to Part XIII withholding tax. The standard rate of 25% may be reduced by a tax treaty, and certain reporting obligations and filing elections may apply — some of which can help reduce the Canadian tax burden. For rental income, you can elect under section 216 to be taxed on net income by filing a Canadian return. For certain retirement income, you can elect under section 217 to be taxed as if you were a resident, which may lower your tax. You may also have tax obligations in your country of residence, so professional advice is recommended.

Determining the date you become a non-resident of Canada is a question of fact and depends on your particular circumstances. In general, the CRA and the courts look at when your significant residential ties with Canada have been sufficiently severed and whether you have established residential ties elsewhere. The most important ties usually include a home in Canada, a spouse or common-law partner in Canada, and dependants in Canada, although other personal, social, and economic ties may also be relevant.

As a practical guideline, the relevant date is often associated with the latest of: the date you leave Canada, the date your spouse or common-law partner and dependants leave Canada, or the date you become resident in the country where you settle. However, this is not a mechanical rule, and the result depends on the full factual context.

In some cases, an applicable tax treaty may also affect the analysis. If you are considered resident in both Canada and another country under domestic law, the treaty tiebreaker rules may determine that you are resident only in the other country, in which case you may be treated as a non-resident of Canada for treaty purposes and, subject to the Income Tax Act, for Canadian tax purposes as well.

Because residency status is highly fact-specific, the determination should be made based on a full review of the individual's circumstances.

Form TP-21.4.39-V, the Cryptoasset Return, must be filed by a Québec taxpayer whether an individual, an individual in business, a corporation, or a trust or any partnership that, during the year, owned, received, disposed of, or used cryptoassets in a transaction, or received cryptoassets as rewards from mining or staking.

Cryptoassets include items such as cryptocurrencies, security tokens, non-fungible tokens, utility tokens, privacy coins, and stablecoins.

The form must be filed with the income tax return for each taxation year or fiscal period during which such transactions took place or if crypto-assets were held. Failure to file form TP-21.4.39-V may result in penalties. It is therefore important to properly document all the transactions and retain the necessary supporting records to comply with Revenu Québec's reporting obligations.