If you are a Canadian resident with specified foreign property exceeding $100,000 CAD, then you must file a T1135, also known as the Foreign Income Verification Statement. Failing to report these assets can lead to hefty fines and penalties, making it important to understand the requirements and process of reporting specified foreign assets. In this blog post, we will cover everything you need to know about T1135 reporting for Canadian residents.

What is T1135?

T1135 is a form that Canadian taxpayers must file if they own specified foreign property with a total cost exceeding $100,000 CAD at any point in the year. Specified foreign property includes funds held in foreign bank accounts, stocks or securities held outside of Canada, interests in foreign trusts, and real estate located outside of Canada.

Who Needs to File T1135?

If you are a Canadian resident and hold specified foreign property with a total cost of more than $100,000 CAD at any time during the year, you must file a T1135 form. The specified foreign property can include bank accounts, real estate, stocks, bonds, and interests in foreign trusts. It is essential to note that even if the specified foreign property is jointly held with a non-resident spouse or common-law partner, it must still be reported on the T1135.

When to File T1135?

The T1135 must be filed every year, along with your income tax return. The deadline for filing T1135 is the same as your income tax return, which is typically April 30th for most individuals. However, for self-employed individuals and their spouses, the deadline is June 15th, although any taxes owed must still be paid by April 30th.

Penalties for Not Filing T1135

Failure to file a T1135 or providing inaccurate information on the form can lead to severe consequences. The penalty for failing to file T1135 is $25 per day, up to a maximum of $2,500 per year. If the CRA determines that the failure to file was intentional, the penalty is calculated at 5% of the total cost of the foreign property.

How to File T1135?

You can file the T1135 form electronically using the CRA’s My Account or Represent a Client service. Alternatively, you can also file a paper copy of the form. Ensure that you have all the required information, such as the type of property, location, and cost, before filing the form. It is advisable to seek the assistance of a tax professional to ensure that you have accurately reported all specified foreign property.

In conclusion, filing T1135 is mandatory for Canadian residents who hold specified foreign property with a total cost exceeding $100,000 CAD. Failing to report these assets can lead to hefty fines and penalties. It is essential to keep track of all specified foreign property and file the T1135 form accurately and on time. If you need assistance with T1135 reporting, don’t hesitate to reach out to a tax professional.