The Joint Committee on Taxation of the Canadian Bar Association and CPA Canada (JCT) regularly studies the details of proposed tax legislation and presents technical input to the Department of Finance Canada on how to best implement them.\nA Budget 2018 proposal would bring the information return deadline in respect of a taxpayer’s foreign affiliates in line with the corporate income tax return deadline, for tax years starting in 2020 and later. That means taxpayers would have to file their T1134 information forms by six months after the end of their taxation year, instead of 15 months after tax year-end under current rules. \nFinance Canada has indicated that moving up the deadline up would help the Canada Revenue Agency (CRA) get all the information it needs to risk-assess international businesses upfront. In addition, the current deadline of 15 months after the tax year end compresses CRA’s reassessment period, thus reducing the time available for CRA to carry out its audit. The JCT made a submission to Finance Canada pointing out the significant challenges that the shortened deadline would place on taxpayers. CPA Canada’s Tax Advisory Committee (TAC) later met with Finance Canada to discuss the Joint Tax Committee’s recommendations and alternative solutions.\nConcerns raised by the JCT and TAC include: \n\n Final financial statements and final taxes are needed to fill the form\n properly, but these may not be available until well after six months\n after year-end, depending on the tax filing deadlines of other countries\n (e.g., U.K., Germany).\n Taxpayers with a high number of subsidiaries would find it even harder to meet the new deadline.\n Some taxpayers might file the form with incomplete information, so they could meet the deadline and amend the forms later when the information is received, wasting time and effort for the taxpayer and CRA alike.\n Some taxpayers might be tempted to use poor quality information in their initial filings since they know they will be re-filing anyway.\n The deadline for country-by-country reporting in Canada is 12 months after year-end and, since the two reports depend on similar information, it may make sense to coordinate the deadlines for both the T1134 and country-by-country reports.\n\nThe JCT’s submission called on the government to abandon the proposals or, if it does go ahead, to shorten the deadline to 12 months after tax-year. A higher de minimis exception would remove the filing burden for many taxpayers, especially those with many subsidiaries. (However, this would still cause problems for taxpayers with subsidiaries in the U.K., Germany and other countries with corporate tax return deadlines longer than 12 months after tax year-end).\nIn discussions, Finance Canada officials said they would look into the possibility of raising the current de minimis threshold, along with other ways to streamline and simplify the form.\nDraft income tax legislation (released for consultation on July 27, 2018) maintains Budget 2017’s T1134 proposed deadline at six months following year-end. \n\nIn addition, the de minimis threshold has not changed. Form T1134 is not required if the total cost amount to the reporting entity at any time in the year of the interest in all foreign affiliates was less than $100,000 and the foreign affiliate is "dormant" or "inactive" for the affiliate’s tax year ending in your tax year. A foreign affiliate is "dormant" or "inactive" if it has less than $25,000 gross receipts, and assets with a total fair market value of no more than $1 million.\n\nFinance Canada is consulting on the July 27, 2018 proposals until September 10, 2018, so there are still opportunities to raise concerns about the draft rules and suggest alternatives. CPA Canada is continuing to provide input to Finance Canada and the CRA on this issue, and we want to hear your views.\nKeep the conversation going\nWhat do you think is the optimal T1134 deadline for meeting the needs of taxpayers and the CRA alike? Do you have additional suggestions for easing the filing burden? Post a comment below.\n\nCPA Canada’s Tax Blog is designed to create an exchange of ideas on tax policy and practice issues, and their impact on those who practice tax. Your comments can provide helpful input into the public interest advocacy positions developed by CPA Canada.