Disclosing foreign property
Understanding the CRA rules and filing Form T1135
Taxpayers resident in Canada who own specified foreign property (SFP) with a cumulative cost exceeding $100,000 at any time during the year are required to disclose these details on Form T1135, Foreign Income Verification Statement. The form does not compute additional income taxes payable on the SFP disclosed but rather is intended to allow the Canada Revenue Agency (CRA) to gain insight on taxpayers’ non-Canadian assets as part of enforcement against international tax evasion.
Here is some basic information about Form T1135 and filing details.
What is specified foreign property?
Many assume that SFP only includes assets physically located outside of Canada; however, the definition is broader than it appears. Common categories of SFP include:
- Funds deposited or held outside of Canada. This category includes Canadian dollars held at a financial institution outside of Canada.
- Tangible property situated outside of Canada, such as real estate. However, SFP does not include personal-use property (property used primarily for personal or enjoyment purposes), so this category mainly captures rental or vacant property outside of Canada.
- Shares of non-Canadian corporations. This category applies even if such shares are held in a Canadian brokerage account.
- Shares of Canadian-resident corporations that are held outside of Canada.
- Interests in non-Canadian trusts that were acquired for consideration, such as foreign mutual funds listed on a non-Canadian exchange.
- Interests in partnerships that hold SFP.
- Debts owed by a non-resident of Canada.
- Interests in non-Canadian insurance policies.
SFP does not include the following:
- Personal-use property.
- SFPs held in registered plans (e.g., RRSP/RRIF, RPP, RDSP, RESP, TFSA).
What details have to be disclosed on Form T1135?
The specific information required for each category differs. You should review the Form T1135 with your professional tax advisors to determine what information is needed and where to obtain the information.
Your Richardson Wealth Advisor can provide consolidated reporting for your SFP held at Richardson Wealth.
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