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Foreign reporting requirements—updated form T1135

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  • Our April 2013 tax tip noted that if the total cost of certain foreign property1 that you own exceeds C$100,000 at any time in the year, you have to report information about those properties on Form T1135, “Foreign Income Verification Statement.” Failure to report such foreign properties on Form T1135 may result in significant penalties.

    The CRA has recently released an updated version of Form T1135 which includes more detailed reporting requirements. Whereas the original form required you to identify the type of foreign property held, the cost (within a range), the general area the property relates to, and the total amount of income reported on your tax return from the foreign property, the revised form now requires much more detailed reporting on each foreign property held, including

    • the country where each property is located;
    • the maximum cost of each property held during the year, as well as its cost at year end;
    • any income or loss earned in the year, and any gain/loss recognized on a disposition of the property;
    • the name of the bank or other entity holding funds outside of Canada;
    • if you hold foreign shares, the name of the corporation issuing the shares;
    • a description of any indebtedness owed to you by a non-resident;
    • a description of all other property held outside of Canada.

    There is some limited relief where you have received a T3 or T5 tax slip on an account with a Canadian investment broker or dealer, in respect of a reportable foreign property. In such cases, you simply have to check a box on the form and do not have to provide details on those specific foreign properties.

    For individuals, the revised Form T1135 must be used beginning with the 2013 tax year. To address concerns with the increased compliance requirements, the CRA has recently announced transitional relief to simplify the completion of the form. For the 2013 tax year only, for securities held with a registered Canadian securities dealer, you will only need to provide the combined year-end market value and income earned for all reportable foreign securities held in the account(s). No individual security reporting is required. Also, whereas Form T1135 must normally be filed by the tax filing due date of your income tax return (April 15, or June 15 if you or your spouse are self-employed), for 2013 only, the filing due date of the revised T1135 will be extended to July 31, 2014.

    1 Please refer to the April 2013 tax tip, "Remember your foreign reporting requirements!" for details on what is and is not included in foreign property for reporting purposes.

    March 11, 2014