6 worked Foreign Affiliate Tax Planning case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to foreign affiliate tax planning work, not a specific client's file.
Client: An inbound transferee on assignment · Where: Red Deer, Alberta · Engagement: 4 weeks, fixed fee
Annual saving$72,000
ReorganisationTax-neutral
StructureMatches operations
The situation — An inbound transferee on assignment, Red Deer, Alberta
The structure at an inbound transferee on assignment in Red Deer, Alberta needed fixing. The file was carrying dividends paid to a non-resident shareholder with nothing withheld, leaving the payer holding the liability. Every option for fixing it ran through a reorganisation that had to be done without triggering tax.
What we did for An inbound transferee on assignment, Red Deer, Alberta
We worked with the client's lawyer. Together, we reconstructed the day count on both sides of the border and documented the residency and treaty position before either revenue authority asked. We also prepared the elections, resolutions and valuations the structure needed to stand up.
The result — An inbound transferee on assignment, Red Deer, Alberta
The structure now matches the business. Annual saving of $72,000, and the reorganisation itself was tax-neutral.
Case Study 2 · Backlog brought current
$13,000 Of Arbitrary Assessments Vacated After 3 Years — US Pension Recipient, Barrie
Client: A Canadian resident receiving US pension income · Where: Barrie, Ontario · Engagement: 3 weeks, fixed fee
Arbitrary tax vacated$13,000
Years brought current3
Account statusCurrent
The situation — A Canadian resident receiving US pension income, Barrie, Ontario
3 years of unfiled returns had turned into notional assessments at a Canadian resident receiving US pension income in Barrie, Ontario. Underneath lay invoices paid to a non-resident consultant working on site in Canada with no Regulation 105 withholding taken. Collections had already started.
What we did for A Canadian resident receiving US pension income, Barrie, Ontario
We filed the outstanding T1135 disclosures through the Voluntary Disclosures Program, which eliminated the penalty exposure entirely. We then filed every outstanding year in chronological order so the CRA could vacate the notional assessments cleanly.
The result — A Canadian resident receiving US pension income, Barrie, Ontario
All 3 years were accepted as filed. $13,000 of arbitrarily assessed tax was vacated, collections action stopped, and the account is current for the first time in 3 years.
Case Study 3 · Sale and succession
$760,000 Sheltered By The Lifetime Capital Gains Exemption — Non-Resident Landlord, Toronto
Client: A non-resident owning Canadian rental property · Where: Toronto, Ontario · Engagement: 10 weeks, fixed fee
Gain sheltered$760,000
ClosingOn schedule
Share qualificationMet
The situation — A non-resident owning Canadian rental property, Toronto, Ontario
A non-resident owning Canadian rental property in Toronto, Ontario had an offer on the table and 10 months to close. The shares did not qualify for the capital gains exemption. A shareholder loan balance that would have been picked up as income on closing was part of the reason.
What we did for A non-resident owning Canadian rental property, Toronto, Ontario
We purified the corporation so the shares met the qualifying tests. We filed the section 216 election with the supporting rental statements and recovered the excess withholding as a refund. All of it was done well ahead of the closing date.
The result — A non-resident owning Canadian rental property, Toronto, Ontario
The sale closed on schedule with $760,000 sheltered by the lifetime capital gains exemption across the shareholders.
Case Study 4 · Records and systems rebuilt
Books Rebuilt From Source, $5,800 In Unclaimed Input Tax Found — US LLC Shareholder, Edmonton
Client: A shareholder of a US LLC · Where: Edmonton, Alberta · Engagement: 3 weeks, fixed fee
Unclaimed tax found$5,800
Records rebuilt25 months
ProcessDocumented
The situation — A shareholder of a US LLC, Edmonton, Alberta
A shareholder of a US LLC in Edmonton, Alberta could not answer basic questions about its own numbers. A departure year filed as a normal resident return with no deemed disposition reported sat between the bank statements and the ledger.
What we did for A shareholder of a US LLC, Edmonton, Alberta
We registered the payer for a non-resident withholding account, remitted the Regulation 105 amounts due, and applied for waivers covering the rest of the contract. We then documented the process so the work does not depend on any one person remembering how it was done.
The result — A shareholder of a US LLC, Edmonton, Alberta
Records rebuilt and reconciled, $5,800 recovered in input tax credits that the old file could not support, and a documented monthly process now in place.
Case Study 5 · Deadline rescue
$96,000 Late-Filing Penalty Cancelled On Relief Application — US Rental Owner, Surrey
Client: A Canadian resident with a US rental property · Where: Surrey, British Columbia · Engagement: 3 weeks, fixed fee
Penalty cancelled$96,000
Relief applicationGranted
ReturnAccepted as filed
The situation — A Canadian resident with a US rental property, Surrey, British Columbia
A Canadian resident with a US rental property in Surrey, British Columbia had already missed one deadline and was about to miss a second. Behind it sat 25% withholding on gross Canadian rent where a section 216 election would have taxed only the net. A penalty of $96,000 was accruing.
What we did for A Canadian resident with a US rental property, Surrey, British Columbia
We split the work into what had to happen before the deadline and what could follow it. Then we aligned the Canadian and US reporting of the same income so the foreign tax credit claim carried support on both returns.
The result — A Canadian resident with a US rental property, Surrey, British Columbia
The outstanding return was accepted as filed, and the taxpayer relief application cancelled $96,000 of the penalty already assessed on the earlier year.
Case Study 6 · Objection and relief
Desk-Review Assessment Of $74,000 Vacated — US Retirement Account Holder, Burnaby
Client: A dual citizen with a US retirement account · Where: Burnaby, British Columbia · Engagement: 6 weeks, fixed fee
Assessment vacated$74,000
Supporting recordsNow on file
AccountCleared
The situation — A dual citizen with a US retirement account, Burnaby, British Columbia
A dual citizen with a US retirement account in Burnaby, British Columbia was carrying $74,000 of penalties and interest. The charges arose from a US LLC taxed as a corporation in Canada, producing double tax on the same income. Much of that amount accumulated during a period the CRA itself had delayed.
What we did for A dual citizen with a US retirement account, Burnaby, British Columbia
We restructured the US holding so the Canadian and US characterisations aligned, ending the double taxation going forward. We framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result — A dual citizen with a US retirement account, Burnaby, British Columbia
The assessment was vacated. $74,000 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
