Form T1135 – Foreign Income Verification Statement
Are you a Canadian resident who is an individual, corporation, partnership, or trust? If so, you are required to report holdings of Specified Foreign Property that, collectively, costs $100,000 or more at any time during that given year.
Specific Foreign Property can consist of a number of different things such as foreign bank accounts, shares of Canadian corporations on deposit with a foreign broker, interest in a non-resident trust and patents, copyrights or trademarks held outside of Canada.
Does this sound like you? If so than you are required to submit the Foreign Income Verification Statement form on an annual basis. In an attempt to make the filing of this form as convenient as possible, the T1135 can now be electronically filed. However, if there are things that you need to enclose with the form then it should be paper filed.
Sometimes life gets away from you and may result in you filing a T1135 form late. If this is the case consider yourself warned, it may allow the CRA to extend the period in which to reassess a taxpayer! It is for this reason that it is vitally important to file the T1135 properly and on time. Failing to do so can double the period during which the CRA can audit and reassess a tax return.
Not filing a return can result in a variety of penalties. For instance, you run the risk of being penalized for a minimum of $25 per day for upwards of 100 days (having a minimum of $100 and maximum of $2,500).
If you are avoiding filing this form on purpose or under circumstances amounting to gross negligence, the penalty is $500 per month for upwards of 24 months, having a maximum penalty of $12,000. After 24 months, you are then subject to a penalty of 5% of whatever resulted in you having to file Form T1135, for example 5% of the cost of the foreign property.
Have questions about Foreign Property? Not sure if you are required to submit a Foreign Income Verification Statement? Call Barrett Tax Law and we will provide you all the necessary information.
Please note that the items listed above are not a complete list of items that are included in the Specified Foreign Property list. For a complete list of items that are included and excluded please contact Barrett Tax Law.
