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Published: March 4, 2020

Last Updated: April 26, 2021

New Changes Announced

Change to the new foreign reporting rules were contained in the Notice of Ways and Means Motion tabled on December 5th, 1996. These changes include an extension of the first filing deadline for required information returns.

New Filing Deadline

As originally proposed, the first information return in respect of 1996 would have been due by April 30th, 1997. This deadline has been extended to April 30th, 1998 in respect of transfers or loans to non-resident trusts, foreign investments over $100,000 and distributions from non-resident trusts. The deadline for returns with respect to foreign affiliates is extended to June 30th, 1998.

Note that returns will still be required for 1996. It is only the deadline for filing that has been extended.

Filing Requirements

The new rules require Canadian residents to file an information return in the following 4 circumstances:

  • Where they owned more than $100,000 of foreign investment property
  • Where they transfer or loan property to a non-resident trust
  • Where they receive a distribution from a non-resident trust
  • Where they own an interest in a foreign affiliate.


Certain of the proposed penalties have been reduced. The penalty for failure to file for more than 24 months is reduced from 10% of the cost of property to 5%. Furthermore, the penalty will only apply where the failure to file is done knowingly or is attributable to gross negligence. The previous proposal would have had the penalty apply in all situations regardless of the circumstances.

The penalty for simple failure to file is now $25 per day to a maximum of $2,500. There is a greater penalty for failure to file of $500 per month to a $12,000 maximum, but it is applicable only where the failure to file is done knowingly or in circumstances amounting to gross negligence. Again, previously the larger penalty was applicable in all situations.

A due diligence exception has also been introduced. A person will be exempted from the application of the penalty for omission to supply information on a transfer or loan to a non-resident trust or foreign affiliate information return where the taxpayer exercises due diligence in attempting to obtain the required information and discloses to Revenue Canada the steps that have been taken to obtain the information that was not available.

New Residents of Canada

Individuals will not have to file an information return for the first year in which they become residents of Canada. This is a new proposal.

Exception for Dormant Affiliates

Another new proposal is that dormant and inactive foreign affiliates, as determined by certain threshold amounts, will not have to be reported. Revenue Canada is presently reviewing possible threshold amounts.


"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

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