CRA Announces Change to Reporting Foreign Income on Form T1135
Recently, the CRA released the revised Foreign Income Verification Form T1135 as announced in the 2013 Federal Budget. Effective immediately, taxpayers are required to use this new form.
Taxpayers must now provide additional information, including:
- The name of the specific foreign institution, investment or other entity holding funds outside Canada.
- The specific country to which the foreign property relates.
- The cost of the property at the end of the year, the highest cost amount during the year and the income or gains generated from the foreign property, on a property by property basis.
However, there is some good news for those taxpayers who hold foreign property through Canadian brokerage and investment accounts. The new form states that “where the reporting taxpayer has received a T3 or T5 from a Canadian issuer in respect of a specified foreign property for a taxation year, that specified foreign property is excluded from the Form’s reporting requirement for that taxation year”. The Form includes a box that must be checked where such property is held, so it appears that the Form still does have to be filed even if all of the property is subject to T3/T5 reporting.
Where a taxpayer fails to comply with the requirements of the new form, proposed legislation adds a three-year extension to the normal reassessment period (which is generally three years from the date of the original notice of assessment) to the entire tax return. As a result, if a taxpayer fails to comply with the Form’s reporting requirements, the entire income tax return for the year will not be statute barred until six years after the date of the original notice of assessment.
We continue to keep current as more details are announced.
For additional information, please contact your Lipton advisor.