Streamlining reporting requirements for foreign assets

Individuals, corporations, trusts, and partnerships that, at any time during a year, own specified foreign property with a total cost of more than $100,000 must file a Form T1135, Foreign Income Verification Statement, by the filing due date of their income tax return. Certain entities are not required to file this form. Refer to the form for further details.

Form T1135 must be filed even if the income tax return (or partnership information return) does not have to be filed. Refer to the Foreign Income Verification Statement for more information on Form T1135 and what is considered specified foreign property.

As a result of Budget 2013, the Canada Revenue Agency (CRA) revised Form T1135 to collect more detailed information about each specified foreign property for the 2013 and later tax years. The information requirements include:

• the name of the specific foreign institution or other entity holding funds outside of Canada;

• the specific country to which the foreign property relates; and

• the income generated from the foreign property.

The strengthened Form T1135 is useful in verifying whether taxpayers are correctly reporting their foreign income from such properties for Canadian tax purposes.

The revisions introduced to Form T1135 in 2013 requiring taxpayers to provide more detailed information on each specified foreign property has resulted in a compliance burden for some taxpayers. As a result, Budget 2015 proposes to implement a two-tier information reporting structure for specified foreign property. For taxpayers who own specified foreign property with a total cost of more than $100,000, but throughout the year was less than $250,000, there will be streamlined information reporting requirements on Form T1135.

This simplified reporting method will reduce the compliance burden while maintaining the CRA’s ability to address international aggressive tax avoidance and combat international tax evasion.

The proposed simplified information reporting requirements on Form T1135 will apply to returns filed for tax years that begin after December 31, 2014. For individual taxpayers, the new requirements will apply to tax years starting with 2015.

No. Taxpayers who own specified foreign property with a total cost of more than $100,000 still have to file Form T1135.

The CRA plans to communicate the information requirements for the simplified reporting method by the end of October 2015. The CRA encourages taxpayers to check the CRA website for more information.

No. The current detailed information reporting requirements on Form T1135 will continue to apply to those taxpayers who, at any time during a year, own specified foreign property with a total cost of $250,000 or more.

The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its webpages often. All new forms, policies, and guidelines will be posted as they become available.

In the meantime, please consult the Department of Finance Canada's Budget 2015 documents for details.