BOI reporting under the U.S. Corporate Transparency Act may affect Canadian businesses with U.S. ties learn who must file and the risks of non-compliance.
The U.S. Corporate Transparency Act (CTA) introduced new rules requiring certain companies to disclose their “beneficial ownership information” (BOI) to the Financial Crimes Enforcement Network (FinCEN). These rules are designed to increase transparency and prevent money laundering.
But after a major rule change in March 2025, the scope of BOI reporting narrowed significantly. If you are a Canadian business owner with U.S. operations, here’s what you need to know about whether these rules apply to you.
What Is BOI Reporting?
BOI reporting requires reporting companies to submit details about their beneficial owners to FinCEN. A beneficial owner is any individual who:
- Directly or indirectly exercises substantial control over the company, or
- Owns or controls at least 25% of the company’s ownership interests.
The information required for each beneficial owner includes:
- Full legal name
- Date of birth
- Current residential street address
- A unique identifying number from a valid ID (e.g., passport, driver’s license)
- An image of that identification document
Who Must File BOI Reports?
As of March 26, 2025, the rules changed:
- U.S.-created entities (such as U.S. corporations and LLCs) and U.S. persons are now exempt.
- Foreign entities (including Canadian companies) that are registered to do business in a U.S. state or Tribal jurisdiction by filing with a secretary of state (or similar office) must file, unless an exemption applies.
In practice:
- If your Canadian company itself registered in a U.S. state to do business, you may need to file.
- If you own a U.S.-formed subsidiary, that subsidiary is exempt under the 2025 rule.
Are There Exemptions?
Yes, but they are limited. Exempt entities include banks, credit unions, insurance companies, SEC-registered entities, and certain large operating companies.
The large operating company exemption applies if all of the following are met:
- More than 20 full-time employees in the U.S.
- An operating presence at a physical office in the U.S.
- A filed U.S. federal income tax return showing more than $5 million in gross receipts or sales (excluding foreign-source receipts for this test)
Most small to medium-sized Canadian businesses with U.S. registrations will not qualify for this exemption.
Deadlines for Filing
- Foreign entities registered before March 26, 2025 → must file by April 25, 2025.
- Foreign entities registered on or after March 26, 2025 → must file within 30 days of registration.
What Are the Risks of Non-Compliance?
Penalties for failing to comply are steep:
- Civil penalties of up to $500/day (adjusted for inflation — $591/day as of 2024 guidance) until the violation is corrected.
- Criminal penalties of up to $10,000 and/or two years in prison for willful violations.
How Canadian Businesses Can Prepare
If your Canadian company is registered to do business in the U.S., you should:
- Review your U.S. registrations and entity structures
- Identify all beneficial owners and control parties
- Work with a cross-border accounting or legal team to ensure timely and accurate filings
At IDM Professional Accounting, we specialize in helping Canadian businesses navigate cross-border tax and compliance issues. Whether you operate in Canada, the U.S., or both, we’ll ensure you stay compliant while minimizing your tax burden.
Contact us today to book a consultation and learn more about your reporting obligations.