Doing Business Across Borders?
If your company in Canada has any dealings with a business or partner outside Canada, even just sending or receiving funds,you may need to report it to the CRA through Form T106.
What Is Form T106?
Form T106 is an information return required by the Canada Revenue Agency (CRA) for Canadian corporations, trusts, partnerships, or individuals who have transactions with non-residents. that is, with people or companies outside Canada.
This includes transfers of:
Money (loans, advances, repayments)
Property or assets
Services or royalties
Intellectual property or licensing fees
If the total value of those cross-border transactions exceeds CAD $1 million in a year, the CRA requires you to file Form T106.
Why Does It Matter?
The CRA uses T106 to make sure transactions between Canadian entities and their foreign affiliates are at arm’s length, meaning priced fairly, not manipulated to shift income or tax obligations.
Even legitimate business dealings,like funding a foreign branch or paying a family-owned overseas supplier, can trigger this filing requirement without you realizing it.
New Minimum Reporting Limits
There are a few small exceptions (“de minimis” rules):
For tax years before 2022 → under $25,000 with a single non-resident.
For 2022 and later → under $100,000 with a single non-resident.
Anything beyond that must be reported, even if it’s a short-term transfer or loan repayment.
Penalties for Not Filing
Missing or late T106 can lead to penalties of $25 per day, up to $2,500 per year, and more if CRA views it as a pattern of non-compliance.
If you’ve realized you forgot to file, don’t panic ,the CRA offers a way to fix it before penalties get worse.
Voluntary Disclosures Program (VDP)
The Voluntary Disclosures Program lets taxpayers come forward to correct past mistakes or missed filings.
If your application is accepted, you may qualify for:
Relief from penalties
Partial relief from interest
Protection from criminal prosecution
The key is to file before CRA contacts you, and to disclose everything honestly and completely. Pantax helps clients prepare these applications clearly and strategically, ensuring your compliance story is told the right way.
Pantax Tips
Even a simple fund transfer between your Canadian company and a foreign affiliate can count.
Keep clean records, bank wires, invoices, contracts.
Review your T106 eligibility each year.
Disclaimer
This article provides general information only and does not constitute legal or accounting advice. Each case is unique. For personal guidance, please contact Pantax for a consultation.