Foreign Income Verification (CRA Form T1135)
Canadian resident individuals, corporations, trusts and partnerships have to declare on their tax returns whether they owned specified foreign property costing more than $100,000 during their tax year. If so, they have to complete Form T1135: Foreign Income Verification Statement.
Specified foreign property includes:
1. Funds held outside Canada
2. Shares of non-resident corporations (other than foreign affiliates)
3. Indebtedness owed by non-residents
4. Interests in non-resident trusts
5. Real property outside Canada
6. Other property outside Canada
7. Foreign property held in an account with a Canadian registered securities dealer
“Specified Foreign Property” does not include:
• a personal-use property;
• a property used or held exclusively in carrying on an active business;
• a share of the capital stock or indebtedness of a foreign affiliate;
• an interest in an exempt trust, as described in the Income Tax Act;
• an interest in, or a right to acquire, any of the above-noted excluded foreign property.
If the total cost of specified foreign property is between $100,000 and $250,000, you have the option of completing the form using the simplified reporting method where you select the type of foreign property or properties that you owned, the source country, the total income and capital gain earned from them in the year, if any.
It the total cost of specified foreign property is $250,000 or more, you are required to complete the form using the detailed reporting method.
Some of the information required for the detailed reporting method includes:
1. Name of each bank or entity outside Canada holding the funds
2. Name of each non-resident corporation that you owned shares of during the year
3. Description of each indebtedness owed to you by non-residents
4. Name of each non-resident trust in which you hold an interest
5. Description of each real property (other than personal or active business use) outside Canada that you owned during the year
6. Description of other properties outside Canada
7. Name of the Canadian registered securities dealer with whom you had an account that held foreign property during the year
For #1 to #6 above, in addition to the source country, you need the maximum cost of each property at any time in the year as well as the cost of each property at the end of the tax year. You also need to provide any income or capital gain earned during the year for each property.
For #7, for each Canadian registered securities dealer, you can combine the properties by source country. For each source country, you must provide the maximum fair market value of the properties during the year as well as the fair market value of the properties at the end of the tax year. You also need to provide any income or capital gain earned during the year for each source country.
The Form T1135 is due on the same date as the income tax return is due.
• For most individuals, it is due on April 30.
• For individuals who are self-employed or spouse is self-employed, it is due on June 15.
• For deceased individuals (date of death between Nov.1 to Dec.31), it is due 6 months after date of death.
• For corporations, it is due 6 months after their fiscal year end.
• For trusts, it is due 90 days after December 31.
• For estates, it is due 90 days after tax year end.
The above information is of a general nature only and should not be relied upon for specific situations. Call Marlies Y Hendricks, CPA at 416-766-3941 or submit email enquiry form below to set up a consultation.
