Canadian taxpayer who owns foreign assets, it is important to understand obligations when it comes to reporting them to CRA. One such requirement is filing the T1135 form, also known as the “Foreign Income Verification Statement“.
T1135 form is a declaration that Canadian taxpayers must file to disclose their foreign assets, such as bank accounts, real estate, investments and shares.
Its purpose is to help the CRA prevent tax evasion by ensuring taxpayers report income earned from foreign sources accurately.
By providing this information, CRA can effectively enforce tax laws and maintain integrity of Canada’s tax system.
Individuals, corporations, trusts, and partnerships are required to file the T1135 form if the total cost amount of their specified foreign property exceeds CAD 100,000 at any time during the tax year.
Specified foreign property are assets located outside of Canada that fall into specific categories including funds held in foreign banks, real estate property, shares of foreign companies and/or interests in foreign trusts.
To determine whether you need to file the T1135 form, you should assess the cost amount of your specified foreign property.
The cost amount includes original cost of property acquired, any subsequent additions or improvements in property and property related expenses such as legal fees or commissions. If the cumulative cost amount exceeds CAD 100,000, you are required to report.
The T1135 form must be filed by the same deadline as your income tax return. For individuals, this is usually April 30th, but it may vary based on your circumstances.
It’s essential to meet this deadline to avoid potential penalties. Failure to file T1135 form or providing inaccurate or incomplete information can result in penalties of up to CAD $2,500 per taxpayer per year.
When completing the T1135 form, ensure taxpayer have accurate and up-to-date information regarding their foreign assets.
Taxpayer have to provide details such as asset’s description, the country in which it is located, its maximum cost amount during the year, and income earned from the asset.
Remember to keep supporting documents, such as bank statements or investment records, as they may be required to validate the information provided.
If a taxpayer is uncertain about T1135 form or need assistance, it’s recommended to consult a professional tax accounting firm like Veracity Accounting. They can help ensure accurate reporting and compliance with Canadian tax laws.