Form T106 Explained: Related-Party Non-Resident Deals
The C$1 million threshold, what's reported, the deadline, and why transfer pricing starts here
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Form T106 is the CRA information return a Canadian taxpayer files to report transactions with non-arm's-length non-residents — a U.S. parent, subsidiary, or sister company — when those transactions total more than C$1 million in the year. It lists each non-resident and the types and amounts of transactions, and it's the CRA's main source for selecting transfer pricing audits.
On this page
What's reported
| Item | Examples |
|---|---|
| Sales and purchases of goods | Inventory sold to a U.S. subsidiary for resale |
| Services | Management fees, shared services (the management fees guide) |
| Financing | Intercompany loans, interest, guarantees (the intercompany loans guide) |
| Royalties and licences | Software, trademarks |
| Transfer pricing method | The method used for each transaction type and whether documentation was prepared |
Threshold, deadline, penalties
Required when the total reportable transactions with all non-arm's-length non-residents exceed C$1,000,000 in the year; for tax years beginning after 2024, dealings under C$100,000 with any one non-resident needn't be detailed in Part III of its slip. Due by the taxpayer's return filing deadline — six months after year-end for corporations, April 30 (June 15 if self-employed) for individuals, 90 days after year-end for trusts. Late filing costs the greater of C$100 or C$25 per day for up to 100 days (C$2,500), and can be assessed per slip; a knowing or grossly negligent failure costs C$500 a month up to C$12,000, or C$1,000 a month up to C$24,000 after a CRA demand.
The U.S. counterpart
The U.S. side of the same transactions appears on Form 5472 (filed by the U.S. subsidiary — the Form 5472 guide); when the U.S. company is the parent, it reports them on Form 5471, Schedule M. The CRA and IRS can compare the filings.
Frequently asked questions
Who files Form T106?
Canadian taxpayers whose transactions with related non-residents exceed C$1 million in the year.
What counts toward the C$1 million?
All reportable transactions with non-arm's-length non-residents — sales, services, loans, royalties.
When is T106 due?
With the tax return — six months after year-end for corporations.
Does T106 relate to transfer pricing?
Yes — it reports the pricing methods used and is the CRA's main audit-selection tool for related-party pricing.
Official sources
The Canada Revenue Agency explains: “The reporting person has to file a T106 information return if the amount of the total reportable transactions for all the non-residents combined is more than CAN$1,000,000 (i.e., the total of all Box I amounts is more than CAN$1,000,000).” — Canada Revenue Agency, Information Return of Non-Arm's Length Transactions with Non-Residents (2025 and later tax years) T106 Summary Form, https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t106/t106-25e.pdf
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our Canadian Tax Desk handles T106 reporting, transfer pricing documentation, and coordination with U.S. Form 5472 filings. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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