Form T1135 Foreign Income

foreign currency

Form T1135 Foreign Income Verification Statement must be filed if you, your corporation, trust or partnership, owned or held foreign property with a cost amount of more than $100,000 at any time in the year even if some or all of the property was sold before the year of the year.

The form is used to obtain more information on foreign property in an effort “to better target international tax evasion and aggressive tax avoidance” and is filed at the same time as your tax return.

Foreign investment property that must be reported on the T1135 includes but is not limited to:

  • amounts in foreign bank accounts
  • shares in foreign companies, even if held in a Canadian brokerage
  • shares in corporations resident in Canada held outside Canada (e.g. in a brokerage account in another country)
  • interests in non-resident trusts
  • real estate situated outside Canada (unless mainly held for personal use and enjoyment)
  • other income-earning foreign property

 

Foreign investment property does not include:

  • property held in a registered account such as an RRSP or TFSA
  • any property used mainly for personal use and enjoyment, such as a vehicle, vacation property, jewelry or artwork
  • assets used only in an active business, such as business inventory or the equipment and building used in a business

 

Changes for 2015 and later taxation years have streamlined the reporting requirements.  If the cost amount is more than $100,000 and less than $250,000 throughout the year, the assets can be reported under a simplified reporting method.  Under this method, country codes for the three countries with the highest cost amount during the year as well as the gross income from all specified foreign properties and the gain (loss) from the disposition of all specified foreign property must be reported.

If the cost amount is more than $250,000, the assets must be reported under the detailed reporting method and the following information must be provided:

  • a description of the property
  • country code
  • the maximum cost amount during the year, the cost at the end of the year, the gross income and the gains (losses) on disposition

 

For frequently asked questions and related topics, visit www.cra-arc.gc.ca, search “Form T1135” and click on “Questions and answers about Form T1135”.

For more detailed information on the T1135 form, please call KWB at 780-466-6204 or email us by clicking here.

Thanks to Shannon Warawa of KWB Chartered Accountants for providing this content.

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