One of the most commonly used methods of profit repatriation is through dividend payments from the foreign subsidiary to the Canadian parent. Canada's tax system makes dividends a particularly attractive method of repatriation in many situations.
For a dividend payment to be an optimal solution, there are a number of factors that need to be considered, including the country of foreign operation, that country's tax treaty status with Canada, and the nature of the foreign business operations. Provided that the foreign affiliate is situated in a country with which Canada has a tax treaty and the business generates active business income, dividends from the foreign subsidiary can be returned to Canada free of Canadian income tax. There are also withholding tax rate considerations of the foreign jurisdiction that need to be taken into account. For example, if the foreign operations are in the U.S. or the UK, dividends are subject to a 5% withholding tax.
For foreign entities earning passive income (such as income from interest, rent or royalties), profit repatriation through dividends can become more complicated. Generally such income is taxable in Canada, though the business should also get a credit for any tax paid in the foreign jurisdiction.