Please forward this error screen to 108. Editor’s note: we have updated this article to reflect tax investment advisor magazine broker dealer of the year as of June 2017. CRA’s revised Form T1135 requires taxpayers to provide significantly more information about their foreign property. This article explains the new rules.
Who has to file a T1135? An individual does not have to file a T1135 for the first year he or she is a resident of Canada. 100,000 threshold isn’t based on the fair market value, but on the adjusted cost base of the asset in Canadian currency. Precious metals, gold certificates, and futures contracts held outside Canada. SFP if held with a Canadian broker. What matters is not the currency of the holding, or the stock exchange where the investment is bought or sold. Canadian company bonds denominated in U.
Canadian corporation stocks traded on the New York Stock Exchange are still Canadian and are therefore not considered SFP. Foreign property held for personal use and enjoyment, such as a vehicle, vacation property, artwork, etc. Interests in or indebtedness of a non-resident trust that is a foreign affiliate. On the earlier version of the T1135, there was no need to identify particular foreign assets, or to give the precise cost. The two-tiered system As of the 2015 tax year, CRA has introduced a two-tier information reporting structure for specified foreign property. 250,000 at any time during the year. The amounts that have to be reported are the highest fair market value during the year.
SFPs held at any time in the year, as well as the total gains or losses realized on the disposition of SFPs during the year, have to be reported on a country-by-country basis. Amounts reported on the T1135 form are required to be determined in the applicable foreign currency, and then converted into Canadian dollars. However, if income is received throughout the year, CRA permits using an average exchange rate. Individual as well as corporations can file this form electronically for the 2014 tax year and beyond. Trusts and partnerships are still required to paper file. For all taxation years prior to 2014, taxpayers must paper file the T1135.
For 2013 and following tax years, the reassessment period will be extended by three years if a taxpayer has failed to report income from a SFP on his or her income tax return and the T1135 was not filed, was filed late, or included incorrect or incomplete information. Additional penalties are possible if the taxpayer knowingly or negligently fails to comply. Final thoughts Always keep good records of clients’ investment holdings. Trade confirmation slips can be evidence of cost amounts. And, when in doubt, file the T1135. There are no penalties for filing it even if it is not required.