6 T106 Non-Arm's-Length Transactions Return tax and accounting engagements in full — what the client came to us with, what we did, and what it was worth. Each one is specific to t106 non-arm's-length transactions return work, not a general example.
Case Study 1 · Planning that cut the bill
$65,000 Cut From The Annual Tax Bill — Canadian Corporation with US, Regina
Client: A Canadian corporation with US customers · Where: Regina, Saskatchewan · Engagement: 10 weeks, fixed fee
First-year saving$65,000
RepeatsAnnually
Filing positionUnchanged in risk
The situation
A Canadian corporation with US customers in Regina, Saskatchewan was compliant but paying more than it needed to. The prior year had been filed correctly and still left a departure year filed as a normal resident return with no deemed disposition reported on the table.
What we did
We modelled the current position against the alternatives before changing anything, then filed the outstanding T1135 disclosures through the Voluntary Disclosures Program, which eliminated the penalty exposure entirely.
The result
The change saved $65,000 in the first year and repeats annually. Nothing about the filings became more aggressive; the position is simply the one the rules already allowed.
Case Study 2 · Scaling without breaking
Scaled To 68 Staff With $95,000 Of Working Capital Freed — Inbound Transferee on Assignment, Halifax
Client: An inbound transferee on assignment · Where: Halifax, Nova Scotia · Engagement: 10 weeks, fixed fee
Headcount reached68
Working capital freed$95,000
Missed deadlinesZero
The situation
An inbound transferee on assignment in Halifax, Nova Scotia was growing fast — headcount to 68 in eighteen months — and the back office had not kept up. US tax paid but no foreign tax credit claimed on the Canadian return was the first thing to break.
What we did
We reported the deemed disposition properly on the departure return and claimed the foreign tax credits that had been left unused, and built the compliance calendar for the size the business was becoming rather than the size it had been.
The result
The business reached 68 staff with no missed remittance and no late filing. $95,000 of working capital was freed in the process.
Case Study 3 · Cash and remittance control
Instalments Rebased, $125,000 Of Cash Returned To The Business — Non-Resident Owning Canadian Rental, Edmonton
Client: A non-resident owning Canadian rental property · Where: Edmonton, Alberta · Engagement: 4 weeks, fixed fee
Cash returned$125,000
Instalment basisCurrent year
ReviewedQuarterly
The situation
A non-resident owning Canadian rental property in Edmonton, Alberta was paying instalments calculated on a prior year that no longer reflected the business. Foreign accounts that had passed the $100,000 T1135 threshold three years earlier was tying up $125,000 of cash.
What we did
We rebased the instalments on the current-year estimate rather than the prior-year default, and filed the section 216 election with the supporting rental statements and recovered the excess withholding as a refund.
The result
$125,000 of cash stayed in the business, the penalty cycle ended, and the instalment position is reviewed each quarter against actual results.
Case Study 4 · Missed incentive claimed
$107,000 Credit Claim Filed And Accepted Without Adjustment — Canadian Resident with a, Lethbridge
Client: A Canadian resident with a US rental property · Where: Lethbridge, Alberta · Engagement: 6 weeks, fixed fee
Claim value$107,000
AcceptedWithout adjustment
RepeatableAnnually
The situation
A Canadian resident with a US rental property in Lethbridge, Alberta assumed the credits did not apply to a business its size. Foreign accounts that had passed the $100,000 T1135 threshold three years earlier meant they had applied all along.
What we did
We identified the qualifying activity, built the documentation to support it, and restructured the US holding so the Canadian and US characterisations aligned, ending the double taxation going forward.
The result
$107,000 recovered. Because the eligibility analysis is on file, the same claim can be repeated each year with a fraction of the effort.
Case Study 5 · Cross-border exposure resolved
$84,000 Of Excess Withholding Refunded On Election — Emigrant Who Left Canada, Windsor
Client: An emigrant who left Canada mid-year · Where: Windsor, Ontario · Engagement: 4 weeks, fixed fee
Withholding refunded$84,000
ElectionFiled and accepted
Cross-border reportingConsistent
The situation
An emigrant who left Canada mid-year in Windsor, Ontario was paying tax in two countries on one stream of income, because 25% withholding on gross Canadian rent where a section 216 election would have taxed only the net had never been reviewed against the treaty.
What we did
We filed the outstanding T1135 disclosures through the Voluntary Disclosures Program, which eliminated the penalty exposure entirely and coordinated the timing so the credit claimed in Canada matched the tax actually paid abroad.
The result
$84,000 of excess withholding was refunded and the exposure closed. Both sides of the border now report consistently, which is what keeps the credit claimable.
Case Study 6 · CRA review defended
Audit Defence Closed In 10 Weeks, $36,500 Cleared — Snowbird Spending Winters in, Brampton
Client: A snowbird spending winters in Arizona · Where: Brampton, Ontario · Engagement: 10 weeks, fixed fee
Proposed tax cleared$36,500
Review duration10 weeks
OutcomeNo change
The situation
A snowbird spending winters in Arizona in Brampton, Ontario was selected for review after a departure year filed as a normal resident return with no deemed disposition reported showed up in the CRA's automated matching. The proposed adjustment on t106 non-arm's-length transactions return came to $36,500.
What we did
We reported the deemed disposition properly on the departure return and claimed the foreign tax credits that had been left unused. Every figure in the response traced to a source record the auditor could verify without asking a second question.
The result
The review closed with no change. $36,500 of proposed tax came off the table, and the documentation now in place makes the next review a short one.
Reviewed for the 2025 tax year by Udit Gupta, Certified Tax Accountant. Figures describe representative engagements of this type; outcomes depend on your own facts. Client names and identifying details are omitted for confidentiality.
