Form T1135 – Foreign Income Verification Statement – is required to be completed if a resident (i.e. individual or corporation) of Canada owned specified foreign property with a combined tax cost of more than $100,000 at any time during the year.
Specified foreign property includes foreign bank accounts, non-Canadian investment accounts, share in foreign companies (regardless whether shares are held through a Canadian brokerage firm), foreign rental and investment properties. Specified foreign property does not include personal use property (i.e. vacation property), listed personal property (i.e. artwork, jewelry, coin collection) and property held in a registered account (i.e. RRSP, RRIF or TFSA).
This reporting is required even if the specified foreign property earned no income during the year.
For the 2014 and later taxation years, the Canada Revenue Agency has revised the reporting requirements. One significant change is that specified foreign properties for which a taxpayer receives a T3 or T5 slip were previously exempted from this reporting. These investments must now be reported in the 2014 and later taxation years.
For those taxpayers with specified foreign property (i.e. shares in foreign corporations) held in an account with a Canadian registered securities dealer or Canadian trust company, the revised reporting requires taxpayers to report for each investment the country of investment, highest fair market value during the 2014 taxation year, fair market value at the end of the year and gross revenue. This information may be aggregated on a country by country basis.
The failure to file and false statement and omission penalties are significant.
The filing deadline for the foreign verification statement is the same as the filing deadline for your tax return. For individuals the deadline is April 30, 2015 if you or your spouse/common law partner were not self-employed during the 2014 taxation year and June 15, 2015 if you or your spouse/common law partner were self-employed during the 2014 taxation year.
For additional information on this reporting requirement please refer to the Canada Revenue Agency’s website.
We are requesting that all of our clients consider whether this reporting requirement applies to them, contact their investment advisor to discuss and contact Trout Lake Group before February 27, 2015 with any questions or concerns that they may have.