If you owned any property in a foreign country worth more than $100,000 at any time during the year, make sure to complete Form T1135 (Foreign Income Verification Statement). It is in your interest to complete this form, as there are stiff tax penalties for failing to report foreign property.
Foreign investment property is not just restricted to real estate. There are many things that are considered to be foreign property for income tax purposes, including the funds that you hold in a foreign bank account and bonds that have been issued by foreign governments.
When you own foreign investment property that was worth more than $100,000 at any point during the year, you need to complete and file Form T1135 with your income tax return. Individuals, corporations, partnerships and trusts must complete this form if they own this much foreign investment property.
When you complete your income tax return, you need to answer the question, “Did you own or hold foreign property at any time in the year with a total cost of more than $100,000? If your answer is “yes”, then you need to fill out Form T1135.
Make sure you file Form T1135, as there are some stiff penalties if you forget. Even if an accountant is doing your taxes you are still responsible for ensuring this form is filled out and sent to the CRA.
You must complete Form T1135 for any taxation year that you have foreign properties. If you forget to file this form you may be able to claim a Voluntary Disclosure to avoid paying any stiff penalties. If you are doing this, make sure you include Form T1135 along with the VD form, from any previous year you may have forgot.
Specified Foreign Property
Foreign investment property is not just restricted to real estate. Foreign investment property that must be reported on your Form T1135 includes any funds that you hold in foreign bank accounts, shares of foreign companies that you own, interest you hold in non-resident trusts, and bonds and debentures you hold that were issued by foreign governments, to name a few.
Changes to Form T1135
A few years back, there were some changes made to this form, and it includes a two-tier structure allowing taxpayers who held specified foreign property with a total cost of more than $100,000, but less than $250,000 to check boxes in Part A of the form rather than describe in detail each type of property. Part B of the T1135, the detailed method, will still apply to taxpayers who held specified foreign property over $250,000. Additionally, individuals can file form T1135 electronically along with your tax return through NETFILE.
TurboTax has been serving Canadians since 1993. It is the #1 selling tax preparation software across the country. We have a variety of product options to serve every individual’s needs. Recently added a LIVE service to enable our customers to have access to tax experts at the tip of your fingers. Go ahead and give it a try! Easy to use with a choice of support options to assist you with all your taxation needs.