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Foreign Income Verification Statement
3-10-2015
General Information
The objectives of this reporting requirement are:
1. to enhance compliance with tax laws that require reporting of foreign-source income;
2. to increase taxpayers' awareness of these laws;
3. to provide information to the CRA for the purpose of verifying taxpayers' compliance with these laws; and
4. to better target international tax evasion and aggressive tax avoidance.
Who has to report?
Form T1135, Foreign Income Verification Statement, must be filed by:
• Canadian resident individuals, corporations, and certain trusts that, at any time during the year, own specified foreign property costing more than $100,000; and
• certain partnerships that hold more than $100,000 of specified foreign property.
What property has to be reported?
Specified foreign property is defined in subsection 233.3(1) of the Income Tax Act and includes:
• funds or intangible property (patents, copyrights, etc.) situated, deposited or held outside Canada;
• tangible property situated outside Canada;
• a share of the capital stock of a non-resident corporation;
• shares of corporations resident in Canada held outside Canada;
• an interest in a non-resident trust that was acquired for consideration;
• an interest in a partnership that holds a specified foreign property unless the partnership is required to file form T1135;
• a property that is convertible into, exchangeable for, or confers a right to acquire a property that is specified foreign property;
• a debt owed by a non-resident, including government and corporate bonds, debentures, mortgages, and notes receivable;
• an interest in a foreign insurance policy; and
• precious metals, gold certificates, and futures contracts held outside
Specified foreign property does not include:
• a property used or held exclusively in carrying on an active business;
• a share of the capital stock or indebtedness of a foreign affiliate;
• an interest in a trust described in paragraph (a) or (b) of the definition of exempt trust in subsection 233.2(1);
• a personal-use property as defined in section 54; and
• an interest in, or a right to acquire, any of the above-noted excluded foreign property.
Filing deadline
Individuals, corporations and trusts – Form T1135 is due on the same date as the income tax return.
Partnerships – Form T1135 is due on the same date as the partnership information return under section 229 of the Income Tax Regulations (or what would be the due date for this return if the partnership had to file one).
As of February 9, 2015, individual taxpayers will be able to file this form electronically for the 2014 tax year. Corporations, trusts, and certain partnerships must still paper file for 2014. The CRA will make electronic filing of form T1135 available for corporations and partnerships in the future and will announce when the service becomes available.
For tax years prior to 2014, all taxpayers must paper file the T1135.
To paper file the T1135, you must either attach it to your paper-filed tax return (or partnership information return), or submit it separately, and send it to the Ottawa Technology Centre by the filing-due date. If you need more space, attach another form T1135 to the first completed form or attach a schedule to the prescribed form. The schedule must be in the identical format as the tables on form T1135.
For the 2013 and subsequent tax years, the period within which the CRA can reassess a taxpayer's tax return is extended by an additional three years if the taxpayer has failed to report income from a specified foreign property on their income tax return and form T1135 was not filed on time by the taxpayer, or there is a false statement or omission on form T1135 for that particular tax year.
There are significant penalties that may be applicable for failure to file form T1135 by the reporting deadline, or for making a false statement or omission with respect to the required information.
Footnotes: Footnotes: This column is presented as a general source of information only and is not intended as a solicitation for business. It is always recommended that you consult a qualified tax professional beforeembarking on any of the suggestions outlined above. Mohammed Yasin, CGA, is the principal of M. Yasin & Co. Inc., Certified General Accountants and has offices in Vancouver & Surrey,B.C. For more information on this topic or any other taxation matters, please contact taxes@alameen.ca.
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