Foreign Property Reporting Requirements
For all individuals, corporations, trusts and partnerships that own a portfolio (of specified foreign properties) with a cost of $100,000 CAD or more at anytime during the year, a T1135 form needs to be filed.
Common types of specified foreign property
Common types of specified foreign property include: cash deposited or held outside of Canada, shares of foreign corporations, and real property held outside of Canada. For example, owning Google and Apple shares with a total cost of $90,000 CAD and holding USD cash in an American bank account worth $20,000 CAD would require an individual to file the T1135 form.
In another example, owning an investment/rental property in Florida that costs more than $100,000 CAD requires a taxpayer to file a T1135 form.
Mutual funds and trusts may also be considered specified foreign property when the head office is located outside of Canada. Most mutual funds held in a Canadian investment account will not be considered specified foreign property.
What types of foreign property are not considered specified foreign property?
Common types of foreign property are not considered specified foreign property include: investment held in a registered account (RRSP, TFSA, etc), mutual funds and trusts with a Canadian head office, personal use property and property used in an active business.
These foreign properties are not considered specified foreign properties and therefore are not reported on a T1135.
Information required for filing
The information required for the T1135 form will depend on the type of specified foreign property. For cash deposited or held outside of Canada, we need the country where the funds are located, the maximum amount held during the year, the amount held at year end and any income or loss from the funds.
For shares of foreign corporations and foreign mutual funds held with a Canadian brokerage, please contact your bank/broker. They typically provide a “T1135 Report” showing all relevant information required to file your T1135.
For real property held outside of Canada, we will need the country of where the property is located, the maximum cost during the year, the cost at year end, income/loss from the property and the gain/loss on disposition for the year.
For 2015 and future taxation years, the CRA has introduced a new simplified method to report specified foreign property. If the total cost of all specified foreign property is between $100,000 and $250,000, the CRA allows you to disclose:
- Type of property owned
- Top three counties where the property is held during the year based on the maximum cost
- Income earned from all specified foreign property
- Gain/loss from the disposition from all specified foreign property
The deadline to file the T1135 form is the same deadline for filing the income tax return. Significant penalties may be applied when the T1135 is not accurately completed and filed by the deadline.
Please contact us if you believe you require the T1135 to be filed or if you have any questions.