The CRA recently released the revised Foreign Income Verification Form T1135 as announced in the 2013 Federal Budget.

The current requirements to file the Foreign Income Verification Form T1135 have not changed from previous years. That is, individuals, corporations, trusts, and certain partnerships, that, at any time during a year, own specified foreign investment property costing more than CAN $100,000 must file Form T1135 by the filing due-date of their income tax return. This applies even if the taxpayer has no tax payable during the year.

Specified Foreign Investment Property includes:

  • Funds held outside Canada,
  • Shares of non-resident corporations
  • Debts owed by non-residents (such as bonds issued by non-resident corporations and governments),
  • Interests in non-resident trusts,
  • Real property outside of Canada held for speculative purposes or from which rental income is derived,
  • Other property outside Canada, also, held for speculative purposes.

 
A new element has been added, for 2013 and subsequent taxation years. The reassessment period for a taxation year of a taxpayer has been extended by three (3) years if:

  • the taxpayer has failed to report income earned from a foreign property on their tax return; and
  • Form T1135 was not filed on time by the taxpayer, or a foreign property was not identified, or was improperly identified, on the Form T1135.

 
Among the revisions that were made, detailed information for each property would have to be provided including:

  • The name of the specific foreign institution or other entity holding funds outside of Canada;
  • The specific country to which the property relates; and
  • The income generated from the property;

 
For taxpayers who hold specified foreign property in a Canadian brokerage account, (i.e. shares, debts or interests in non-resident corporations or funds) and have been issued a T3 or a T5 from a Canadian issuer, are not required to complete the Form’s detailed reporting requirement for that specified property. However, the taxpayer is required to indicate so by checking the box provided for that purpose on the new Form T1135.

At RSW we understand that this added level of detailed reporting will cause significant increase in time and effort to abide by the new reporting requirements. We strongly recommend that taxpayers who are required to file Form T1135 begin preparing for the new requirements as soon as the new form is released by the CRA. We continue to keep current as more details and updates are announced and the form is released by the CRA.

 
For more information please contact:

HACHEM W. HALABI, D.FISC, CPA CA
Partner
Tél: 514-842-3911 poste 240

Email: