Plain meaning
A non-resident corporation connected to a Canadian taxpayer through ownership thresholds under Canadian international tax rules.
Also called
controlled foreign affiliate
foreign affiliates
Key points
- Foreign affiliate status depends on ownership and control thresholds set out in the Income Tax Act.
- Controlled foreign affiliate status can trigger additional FAPI and reporting consequences.
- Foreign affiliate rules track different surplus accounts, including exempt surplus and taxable surplus.
- Reporting obligations can apply even where no immediate Canadian tax is payable.
Why it comes up
Foreign affiliate rules affect Canadian businesses and investors with offshore subsidiaries or controlled foreign corporations.