In December 2014, the Canada Revenue Agency (CRA) issued a
letter to a sample of taxpayers to remind them of the criteria for
filing a T1135-Foreign Income Verification Statement and to review
their income tax filings to ensure they have been properly
reporting the relevant assets and income.
All Canadian resident taxpayers are required to file Form T1135
if at any time in the year the total cost amount to the taxpayer of
certain foreign property was C$100,000 or more.
The CRA letter further details the gross negligence penalties
and potential for criminal prosecution for failure to file the
requisite forms where the CRA conducts an audit identifying
unreported offshore income or undisclosed assets. The CRA
also reminds the taxpayer that the CRA’s Voluntary
Disclosures Program (VDP) is available if the taxpayer has
previously not complied with the rules or if the taxpayer has filed
returns that do not accurately reflect offshore assets or foreign
There is some concern that taxpayers who received the letter may
not have been randomly selected, as there are a number of ways the
CRA may have received the necessary information regarding the
holders of offshore accounts (i.e. reports from banks and tax
authorities in OECD countries, reports from Canadian banks
regarding foreign transfers, etc.). The Offshore Tax
Information Program offering essentially a 15 per cent reward to
informants could also be the impetus for this correspondence.
The CRA indicated to members in the professional community that
the receipt of this letter will not preclude the taxpayer from
making a valid VDP submission provided the taxpayer is not aware
of, or had knowledge of an audit, investigation or other
enforcement actions set to be conducted by the CRA or any other
authority or administration with respect to the information being
disclosed to the CRA.
Given the increased effort by the CRA to target this particular
area and the recent revamping of the T1135 Information Return and
its contents, taxpayers are urged to review their foreign assets
and speak to their Collins Barrow tax advisors regarding their
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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The CRA provides new housing rebates for individuals who have purchased or built a new house or have substantially renovated a house or made a major addition to a house who plan on living in it personally or letting a relative live there.
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