Earlier this summer, the Canadian federal government announced the launch of a strengthened Foreign Income Verification Statement (Form T1135) as one of the Economic Action Plan 2013 measures to crack down on international tax evasion and aggressive tax avoidance.
In this announcement, Canadians who hold foreign property with a cost of over $100,000 will be required to provide additional information to the CRA.
The criteria for those who must file a Foreign Income Verification Form (T1135) has not changed; however, the new form has been revised to include more detailed information on each specified foreign property.
Increased reporting requirements include:
- Name of the specific foreign institution or other entity holding funds outside Canada
- Specific country to which the foreign property relates
- Income generated from the foreign property
The types of specified foreign property that you must report remain the same and include:
- Funds held outside Canada including money on deposit in foreign bank accounts
- Shares of non-resident corporations, other than foreign affiliates
- Indebtedness owed by non-residents
- Interests in non-resident trusts
- Real estate held outside Canada
- Other property outside Canada
(including precious metals, shares in corporations resident in Canada but held outside Canada, commodities, future contracts)
Specified foreign property does not include:
- Property in your RRSP, RRIF or RPP
- Mutual funds registered in Canada that contain foreign investments
- Personal-use property, such as a vacation property used mainly as a personal residence
- Property you used or held exclusively in the course of carrying on an active business
For more information on this topic, please read the knowledge centre article – Report Any Income from Foreign Sources.
Navigating all of the rules that govern the reporting of your foreign income can be daunting. For an expert opinion, please set up appointment with FBC.