Form T1135, also known as the “Foreign Income Verification Statement,” is a Canadian tax document used by Canadian residents to report ownership of foreign property. To better understand its role and learn how to complete it correctly, EB Conseil Fiscal presents this guide on the form.
What Is Form T1135?
Form T1135, also known as the Foreign Property Declaration, is a document that Canadians must complete if they own foreign properties with a total value exceeding CAD 100,000. This form requires taxpayers to disclose their foreign bank accounts, real estate, or shares in foreign corporations.
Its purpose is to ensure that taxpayers properly report their foreign assets and comply with Canadian tax laws. Failing to submit this form or completing it incorrectly can result in penalties, so it is important to fully understand its requirements.
Who Must Complete This Form?
Any individual, corporation, or trust residing in Canada who, at any time during the year, owned foreign properties with a total value exceeding CAD 100,000 is required to complete this form. This includes:
- Individuals
- Corporations
- Trusts
- Partnerships
What Qualifies as Foreign Property?
The following items are considered foreign properties:
- Bank accounts held outside Canada,
- Shares in non-resident corporations (even if held in a Canadian brokerage account),
- Bonds held outside Canada,
- Real estate located outside Canada,
- Other properties (e.g., intangible assets) located outside Canada.
What Is Not Considered Foreign Property?
The following are not considered foreign properties for Form T1135:
- Properties used exclusively for personal purposes (such as a vacation home),
- Shares in Canadian corporations held in a foreign brokerage account.
Contents of the Form
The form requires detailed information about foreign properties owned, including:
- The type of property,
- The country where the property is located,
- The original cost of the property,
- Income generated by the property,
- Capital gains realized upon disposal of the property.
Deadlines and Penalties
Form T1135 must be submitted by the same deadline as the annual tax return: April 30 for individuals, June 15 for self-employed individuals (although taxes owed must be paid by April 30), or six months after the fiscal year-end for corporations and trusts.
The penalties for late filing of Form T1135 or providing incorrect information can be severe, ranging from $25 per day of delay (up to a maximum of $2,500) to heavier penalties in cases of willful misrepresentation.
Simplified Reporting for Small Amounts
For taxpayers who own foreign properties with a total cost exceeding CAD 100,000 but less than CAD 250,000 throughout the year, a simplified reporting method is available. This allows taxpayers to report properties by category without providing as many specific details for each property.
Optimize Your Tax Planning with Professionals
As you can see, Form T1135 is an essential tool for the Canada Revenue Agency (CRA) to monitor the foreign holdings of Canadian residents and ensure that all foreign income is properly reported and taxed.
For more information on your tax obligations or for customized strategic planning, don’t hesitate to contact our tax accountants. They will be happy to advise you and help you optimize your tax situation!
