Update: Three Tax Filing Deadlines Include T1135 Form

On February 28, 2014, CRA – recognizing the difficulties of meeting the filing requirements necessary for the completion of form T1135 – Foreign Income Verification Statement required by Canadian Taxpayers – eased the reporting requirements and extended the filing due date to July 31, 2014.

This provides three important tax filing dates to note this tax filing year:

• April 30 for T1 (personal) returns
• June 16 for T1 returns for proprietorships
• July 31 for T1135 reporting – required whether or not you file a T1 return.

The T1135 compliance changes have at least somewhat eased the tax migraine that has been pounding in the heads of tax professionals and investment advisors for the past three months.

For 2013 only, taxpayers can now choose to report an aggregation of all specified properties held with a securities dealer/mutual fund trust, but if you do so, you’ll be required to use that method with all registered securities dealers you deal with. If you choose that method:

• You will not be able to rely on the T3/T5 reporting exemption – report all assets held by all registered securities dealers
• No cost amount needs to be reported and CAN should be used as the country code

Take special note of Section 2 of the T1135 required to report holdings in “Shares of non-resident corporations, other than foreign affiliates” in detail. Using the transitional method of reporting, go to Part 6, rather than Part 2 and list:

• The Canadian Registered Securities Dealer holding the investments,
• "CAN" as the country code of the investments,
• $0 as the maximum cost of the investment throughout the year,
• The cost at December 31, 2013,
• Income or loss incurred on the account for the year,
• Gains/losses incurred on the account for the year.

Other “must-know information” about  Form T1135:

• T1135 is not part of the income tax return and must be mailed to CRA at the Ottawa Technology Centre – electronic filing is not an option.
• This form must be filed whether or not a T1 return is being filed. Extensive and expensive penalties can apply for non-compliance.
• Account statements cannot be used in place of form T1135 or attached to it. Only the prescribed form will be accepted by CRA.
• Canadian Mutual Funds units owned by a taxpayer are exempt from reporting regardless of the underlying investments.
• Mutual fund units of a foreign mutual fund trust are required to be reported, but on the units held, not the underlying investments.

While these changes do not eliminate the need to pay attention to form T1135, it does ease the compliance burden for the current year. Financial professionals now have a year to get information and reports in order for clients because for 2014, form T1135 is back in all its original required detail.

This is just another reason not to rush tax filings until all the information is available from financial firms. Preparing annual Personal Net Worth Statements with tax filings is a good way to ensure there are no missing links.

Thanks to Alan Rowell, MFA, DFA-Tax Services Specialist, and President of The Accounting Place for filing this report, together with notes from Knowledge Bureau’s research department .