Who should use the T1135 form?
If you own foreign property that is valued at more than C$100,000 at any time during the year, you have to file the T1135 form, also known as the Foreign Income Verification Statement.
What kind of property do I have to declare when reporting foreign income?
You declare all specified foreign properties on the T1135. These properties include funds held in banks, stocks, shares of a non-resident corporation, interest, dividend, inheritance, land, and buildings that are outside Canada.
If you held more than 10% shares in a non-resident corporation, you have to file the form. If the shares are in a foreign currency but issued by a Canadian corporation, you don’t file the form.
What are the types of properties that I don’t have to declare?
You do not have to declare mutual funds registered in Canada that invest in foreign stocks, personal property like works of art, jewelry, rare folios, rare manuscripts, rare books, stamps, and coins, vacation property that you use primarily as a personal residence, funds in a registered retirement, income or pension plan, or property exclusively related to your active business.
I have foreign properties in different countries that cost less than $100,000 each. Do I still have to fill the T1135 form?
It depends. If the total cost of the properties combined is more than $100,000, then you have to file the form.
You have funds in a bank in France that cost $60,000. And you have land in the U.S.A. that costs $50,000. Although each property cost less than $100,000, the total amount combined is $110,000. So, you have to file the T1135.
I bought land in Morocco for $70,000 years ago. Today it is worth $300,000; do I have to file the form?
No. if this is the only property you own then you don’t have to file the form. Filing T1135 is based on the cost of the property, not the current value.
What is the due date for filing the T1135 form?
T1135 is due on the same date your income tax return is due. So if you file a personal return which is due on April 30th, you have to file T1135 before this date. If you or your spouse/common-law partner is filing a business return (self-employment) which is due on June 15th, you have until this date to file the form. If you choose a different due date for filing a partnership business return, file the T1135 no later than March 31st after the calendar year of the fiscal period of the partnership.
Are there any penalties for not reporting foreign income?
Yes, the T1135 penalty is $25 a day up to a maximum of $2,500 per year you had to file the form. If you missed a year, submit the form(s) through the CRA’s Voluntary Disclosure Program to correct previous tax returns.
How do I report foreign income on the T1135 form?
You have two methods of reporting: the simplified method and the detailed method. You can choose the simplified method if the cost of all foreign properties is less than $250,000. If the cost is more than $250,000, you have to use the detailed method. You choose the method of filing by ticking the appropriate box under the identification section in the T1135 form.
Simplified reporting method:
Part A of the form lists all the specified foreign property that you can report in this section. Choose the type of property (multiple if applicable) then enter the countries’ codes of the top three countries based on the maximum cost amount of the properties.
You don’t need to report the cost value of the properties nor their current fair market value. You report the gross income (rent, interest, dividend, etc.) or the gain and loss amount if you are disposing the property.
Detailed reporting method:
Part B of the T1135 form lists the type of properties in different tables. In this section, you will report more details than just the country code of your properties.
If you have bought shares in a non-resident corporation for $120,000 that gave you $6,000 in dividends during the year, and by the end of the year; the value of the shares remained the same; you will have to report the following in table 2:
- The name of the corporation
- The country code; in this case, it is the USA
- Maximum cost amount during the year (the maximum value of the shares); most probably $120,000 if it didn’t go higher
- Cost amount at the end of the year: $120,000
- Gross income: your $6,000 dividends
- Gain or loss: Nil since you still own the shares
Do I Have to report the information from the T1135 in my income tax return?
It depends; if your foreign property does not produce income (rents, interest, gain, etc.), you will not report it. You only check the box for foreign property in step 1 of your income tax return. Then file the T1135 separately.
If your foreign property produces income, you will have to report the foreign income on the related lines of your tax return. For example; use the worksheet to report dividends and interest on line 12100 and use schedule 3 to report capital gains or losses.
Our TurboTax Tips on Declaring Foreign Property will provide you with further details.
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