Late today, the Canada Revenue Agency ("CRA") provided
transitional reporting guidance in respect of
prescribed Form T1135 for taxpayers who own specified foreign
property with a cost of $100,000 or more. There were two
transitional provisions provided but such relief
is only applicable for 2013:
The deadline for filing the T1135 for 2013 has been extended to
July 31, 2014, and
Foreign property held in an account with a Canadian registered
securities dealer may report on a combined basis the value of all
property at the end of the year, rather than the details of each
security as specified in the changes to the T1135 in June
In an attempt to catch international tax evasion, the government
announced in 2013 that it would be expanding the reporting
requirements for prescribed form T1135. On June 25, 2013, the
CRA released the "new" T1135. Our June 28,
blog discussed the much expanded reporting requirement and the
significant increased work that would be required by tax
The new T1135 provided a reporting exclusion if the taxpayer
received a T3 or T5 slip from a Canadian issuer in respect of a
particular specified foreign property. However, if the
taxpayer owned a specified foreign property held by Canadian
registered securities dealer, and no T3 or T5 was issued (as the
property did not earn any income), the taxpayer would be subject to
the expanded T1135 requirements. This has been the subject of
a large amount of criticism from the accounting community.
While the transitioning rules are certainly welcome, it appears
that the CRA is still not wholly listening to tax accountants in
Canada. Today's announcement does not provide a permanent
solution for the large amount of criticism with respect to the
"T3/T5" exception. Many tax accountants were
hopeful that all specified foreign property held by Canadian
registered securities dealers would be excluded given the low risk
for tax evasion involved with these accounts.
We are hopeful that the CRA continues to work towards a
permanent solution with the accounting community that provides a
more balanced approach.
Moodys Gartner Tax Law is only about tax. It is
not an add-on service, it is our singular focus. Our Canadian and
US lawyers and Chartered Accountants work together to develop
effective tax strategies that get results, for individuals and
corporate clients with interests in Canada, the US or both. Our
strengths lie in Canadian and US cross-border tax advisory
services, estateplanning, and tax litigation/dispute resolution. We
identify areas of risk and opportunity, and create plans that yield
the right balance of protection, optimization and compliance for
each of our clients' special circumstances.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The new subsection 55(2) regime has now been enacted into law. With these new rules, the ability to pay tax-free dividends amongst related Canadian corporations, once a foundational concept of the Canadian tax system, can no longer be taken for granted for dividends received after April 20, 2015.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).