Changes to Foreign Property Reporting – new Form T1135
Enhanced reporting requirements for taxpayers who hold specified foreign property (SFP) in their non-registered accounts with total cost of at least $100,000 CAD, is now in effect. If applicable to you, revised form T1135 must now be filed with your 2013 personal tax return.
SFP that must be reported to the Canada Revenue Agency (CRA) includes items such as:
- shares and bonds of foreign companies;
- funds on deposit in a foreign bank; and
- a rental property outside of Canada.
The new reporting requirements are now much more detailed for some SFP:
In some cases, reporting of each foreign property country code, annual maximum and year-end cost amount, income or loss, and capital gain or loss realized from each property during the tax year may be required.
Revised Form T1135 excludes certain property from the detailed reporting requirement. Detailed reporting is not required on foreign property for which you have received a T3 or T5 income slip for the year. Whether the reporting exclusion applies must be determined for each specified foreign property and for each taxation year during which the property was held.
Regardless of whether the enhanced reporting requirements apply, form T1135 itself will still be required if your total SFP exceeds $100,000 CAD.
Obtain information required to complete the revised Form T1135: don’t delay! If you are required to file form T1135, we advise you to speak with your broker as soon as possible to address your portfolio’s tax reporting requirements, or contact us.
If you use a discount broker or E-trade, and do not have a personal investment advisor associated with these investments, please contact us to clarify your reporting requirements.
Note, the information that you normally provide us to prepare your tax returns (T3s, T5s, disposition summaries) is insufficient to complete the enhanced reporting on Form T1135, should that be required. We encourage you to begin gathering your SFP reporting information now, to allow us to prepare your revised form T1135 as efficiently as possible.
Up to $2,500 penalty applies for each failure to file Form T1135 by the reporting deadline. A significant penalty may also apply for knowingly making a false statement or omission with respect to the required information.
Please be advised that this new reporting regime will likely result in increased tax filing fees where you hold specified foreign property in a non-registered account. We advise you to be proactive with regards to your foreign property holdings.
For more information please visit CRA’s website or contact us.
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