Earlier this week, the CRA released the revised Foreign Income Verification Form
("T1135") as had previously been announced by the
Federal government in their 2013 Budget. Consistent with our
blog posted on March 26, 2013, taxpayers are now required to
report additional information which makes the T1135 more comparable
to its US cousin – the FBAR.
Overall, the changes to the T1135 are not significant, but will
serve to make its preparation more laborious. Taxpayers must
provide the following additional information:
whether the form is an amended return;
whether the taxpayer or the taxpayer's spouse (or both) are
where the form is prepared by a partnership, the nature of the
partners (individuals, trusts, or corporations) must be
whether foreign income received by the taxpayer is reported on
a T3 or T5 from a Canadian issuer in respect of a specified foreign
the name of the bank or other entity holding funds outside of
if foreign shares are held by the taxpayer, the name of the
corporation issuing the shares;
a description of any indebtedness owed to the taxpayer by a
the name of any non-resident trust in which the taxpayer holds
a description of all real property outside of Canada (except
for personal use property and real estate used in an active
a description of all other property held outside of
Where a taxpayer fails to comply with the requirements of the
T1135, proposed legislation (also announced in the
2013 Federal Budget) adds a three-year extension to the normal
reassessment period which is generally three years from the date of
the original notice of assessment pursuant to subsection 152(3.1)
of the Income Tax Act (the "Act"). The
proposed three-year extension will apply to the entire tax return
rather than a particular transaction as subsection 152(4.01) of the
Act does not provide relief by limiting the scope of a
reassessment. Subsection 152(4.01) has not been amended to
include reassessments issued pursuant to paragraph 152(4)(b.2)
(i.e. due to T1135 reporting deficiencies). In other words,
if a taxpayer fails to comply with the T1135 reporting
requirements, the associated income tax return for the year will
not be statute barred until six years after the date of the
original notice of assessment. As of now, it remains unclear
as to what circumstances will result in a taxpayer being found to
be non-compliant with the T1135 requirements. Will small
cosmetic errors in the preparation of a T1135 trigger this extended
One aspect of the new T1135 requires some clarification in light
of the extended reassessment period for non-compliance noted
above. A new exemption for taxpayers has appeared on the
revised T1135, which applies to a reporting taxpayer who has
received a T3 or T5 slip from a Canadian issuer in respect of a
specified foreign property for that taxation year. According
to the new form, that specified foreign property is
"excluded" from the T1135 reporting requirements for the
year. To be clear, this only exempts taxpayers from providing
details of such foreign property on the T1135 itself.
Pursuant to section 233.3 of the Act, a reporting entity (including
an individual) is required to disclose specified foreign property
where the total cost of the properties exceeds $100,000.
There is no basis in law for exempting the disclosure of any
specified foreign property from the reporting requirements when
considering the $100,000 cost threshold. However, the CRA
appears to not want additional details of such properties.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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