Owner-managers in BC and across Canada

US Citizens Who Own a Canadian Corporation

A Canadian corporation that works well for Canadian tax can create separate US filings and US tax for an owner who is a US citizen or green card holder. Gurleen Kaur, CPA licensed in British Columbia and Washington State, helps owners keep both countries' filings aligned.

Form 5471Section 951A and Subpart FFBAR on company accountsSection 962 election

Review My Company What You May File

Quick answer

What US filings apply when a US citizen owns a Canadian corporation?

Usually Form 5471 every year. The Form 5471 instructions treat a US citizen or resident who owns more than 50% of a foreign corporation's vote or value as a Category 4 filer, and a person owning 10% or more of a controlled foreign corporation as a US shareholder who may also file under Category 5. The penalty for not filing is US$10,000 per company per year, with up to US$50,000 more after IRS notice. US shareholders may also have to include some of the company's income on their own US return even when no dividend is paid, and company accounts can belong on the owner's FBAR.

US filings that commonly apply

Which forms apply depends on ownership percentages, family attribution and the company's income. This table is a starting map, not a filing decision.

Filing	When it commonly applies	Source
Form 5471	Category 4: more than 50% of vote or value. Category 5: US shareholder (10% or more) of a controlled foreign corporation.	Form 5471 instructions
Form 8992	Computes the section 951A inclusion (historically called GILTI) for US shareholders of controlled foreign corporations. Congress revised this regime for tax years beginning after 2025, so the instructions for the year being filed control.	About Form 8992
Subpart F income	Certain passive and related-party income of the company can be included currently on the owner's US return.	Form 5471 instructions
FBAR	Company bank and investment accounts can be reportable when you have a financial interest in or signature authority over them and accounts together exceed US$10,000.	IRS FBAR page
Form 8938	Foreign stock not held in a financial account can be a specified foreign financial asset when thresholds are met.	8938 vs FBAR

Why a BC company can create US tax

Canadian owner-managers often leave profits in the corporation to use lower Canadian corporate rates and pay out later. For a US shareholder, US rules can reach some of that retained income every year through Subpart F and section 951A, even if no dividend is paid.

A sale of the shares can also be taxed differently in each country. Canada's lifetime capital gains exemption has no US equivalent, so a gain that is sheltered in Canada may still be taxable on the US return.

Planning levers to model

Salary, dividends or retained earnings, compared on both returns
The section 962 election, which lets an individual US shareholder be treated like a corporate shareholder for certain inclusions (Form 5471 instructions)
Timing of dividends and foreign tax credits
Ownership changes before a sale, a move or bringing in family members
Clean records so each year's Form 5471 schedules tie to the Canadian financial statements

Behind on Form 5471?

Late Forms 5471 are usually filed with an amended return under the delinquent international information return procedures when the IRS has not contacted you, with a reasonable-cause statement. Penalties can still be assessed during processing. If returns themselves were missed, compare all the options in our catch-up guide.

Common questions

Do I file Form 5471 if I own 100% of my BC company?

Usually yes. A US citizen or resident who owns more than 50% of the vote or value of a foreign corporation is generally a Category 4 filer under the Form 5471 instructions, and the form is filed every year with the US return.

What is the penalty for not filing Form 5471?

US$10,000 for each annual accounting period of each foreign corporation, and if the information is still not filed within 90 days after an IRS notice, a further US$10,000 for each 30-day period, up to US$50,000.

Do I pay US tax if my company does not pay me a dividend?

Possibly. US shareholders of a controlled foreign corporation may have to include certain company income currently under Subpart F and section 951A, computed on Form 8992. Whether an inclusion arises depends on the company's income, taxes and assets.

What is the section 962 election?

An election that lets an individual US shareholder be treated, for certain inclusions, as if the income were received by a corporate shareholder, which can allow a credit for Canadian corporate tax. Whether it helps depends on later dividends and both countries' rates, so it should be modelled first.

Do my company's bank accounts go on my FBAR?

They can. The FBAR covers foreign accounts in which you have a financial interest or signature authority, and an owner who signs on the company's Canadian accounts often needs to include them.

I have never filed Form 5471. What now?

If the IRS has not contacted you, the usual route is to file the late forms with a reasonable-cause statement. If income tax returns are also missing, the Streamlined procedures may fit. Start with our catch-up guide.

Sources

Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.

Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated October 21, 2026. This page is general information, not tax or legal advice for your situation.

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