Form T1135 is called the Foreign Income Verification Statement and must be filled out by Canadian taxpayers who own foreign assets with a cost of more than $100,000 in non-registered accounts. This form is used by the Canada Revenue Agency (CRA) to combat individuals trying to evade income taxes by hiding their assets in offshore accounts.
The Foreign Income Verification Statement was amended in July 2014 and now requires taxpayers to provide more detailed information about foreign investment holdings. Moving forward, taxpayers must report foreign investments on a country by country basis. To reiterate, this form only concerns itself with non-registered accounts in which you hold foreign assets. In this form, you do not need to include details of foreign investments that are held within RRSPs, TFSAs, Canadian ETFS or mutual funds.
You must also report non-financial assets such as real property that you own in a foreign country. For example, if you own a foreign rental property with a cost exceeding $100,000, it must be included on form T1135. This does not apply to a vacation home that is used for personal use and enjoyment.
DUE DATE FOR THE T1135
In regards to filing procedures, the CRA must receive your T1135 form by April 30, of the following year.
PENALTIES FOR FILING T1135 LATE
A $25 per day penalty is charged for late filings, up to a maximum of $2500. Since the CRA does not confirm receipt of the form, it is a good idea to send it via registered mail. At this time, there is no way to electronically file this form; it must be mailed.
VOLUNTARY DISCLOSURE AND THE T1135
If you have failed to file T1135 forms for previous taxation years, the CRA’s Voluntary Disclosure Program will allow you to amend your tax affairs while waiving any potential interest and penalties that would have been otherwise charged.
The growing complexity of Canadian tax forms is not so bad compared to that of the Internal Revenue Service agency in the United States. An expatriate American who holds registered Canadian financial accounts can be responsible for filing up to five different tax forms in relation to those holdings. IRS late filing penalties can be as high as $10,000 per year per tax form. As a result of this, many expatriate Americans have been renouncing their U.S. citizenships to avoid spending all the time and money required each year to file these foreign property reporting forms.
As these reporting forms become increasingly complex and comprehensive, it will take a great amount of time and effort to file all the required information accurately. For the average individual, this process can be very frustrating and time consuming - and the risk of costly errors is great. At Tax Doctors Canada, we can help. Tax Doctors Canada has extensive experience in handling Canadian and US tax matters. You can count on the professional tax accountants at Tax Doctors Canada to give you the best in US Canada tax services.
Tax Doctors Canada offers a stress free Initial No Obligation Phone Consultation with one of our professionally certified tax accountants. We Welcome Your Business!
Tax Doctors Canada, a division of GTA Wealth Management Inc, has 3 office locations (by appointment only) in Toronto, Markham and Mississauga to serve you. You can also have one of our certified tax accountants assist you with your personal tax return requirements remotely from the comfort of your home utilizing Tax Doctors Canada's secure document transfer portal. We accept clients from Canada and worldwide.
