Foreign Asset Reporting

If your clients own assets abroad, they must submit Form T1135 Foreign Income Verification Statement to CRA to disclose whether they had “specified foreign assets” held during the year, if the total cost at any time exceeded $100,000 Canadian. 

The penalties for non-disclosure are very expensive. This form must be filed even if you are not otherwise filing a tax return. If assets are valued under $250,000, a simplified reporting system can be used. 

The types of assets covered in the form include funds held outside Canada and certain real property situated outside Canada. Excluded from the foreign disclosure requirements are personal-use properties, like a vacation home used primarily for personal use (this means, more than 50% of the time). 

Also excluded is property used exclusively in an active business; property in an RRSP, RRIF or a registered pension plan; mutual funds that include foreign investments; property of immigrants (those who file a return for the first time in Canada); and shares in a foreign affiliate.

To learn more about this and other tax issues, consider the DFA-Tax Services Specialist™ designation. Register before September 15 and save on tuition! And remember, Knowledge Bureau courses are also free to try. 

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