Missing deadlines can be expensive.
Form T1135 must be filed by most Canadian-resident individuals, corporations or trusts that, at any time during a year, owned specified foreign property (including most types of income-earning property held outside of Canada, other than personal property and property used in carrying on an active business) costing in total more than $100,000. Form T1135 must also be filed by partnerships that hold more than $100,000 in foreign investment property and whose non-resident members’ share of income or loss is less than 90% during the reporting period.
Form T1135 changes proposed in this year’s federal budget include:
- Revising the form by requiring taxpayers to provide more detailed information regarding each specified foreign property.
- Allowing the form to be electronically filed.
- Extending the normal reassessment period of the tax return if certain conditions are met.
- Improving the form filing process by reminding taxpayers, on their Notice of Assessment, of the obligation to file Form T1135, and by clarifying the filing instructions.
Canada Revenue Agency (CRA) has released revised Form T1135 which must be used for 2013 and subsequent taxations years. The new form calls for more detailed information requirements for each specified foreign property including:
- The name of the specific foreign institution, investment or other entity holding funds outside Canada.
- The specific country to which the foreign property relates.
- The cost of the property at the end of the year, the highest cost amount during the year and the income or gains generated from the foreign property, on a property by property basis.
In the past, unless an omission was due to neglect, carelessness or wilful default, the CRA was prevented from processing a reassessment for additional tax after the normal reassessment period, which is generally three years after the day a notice of an original assessment was sent to a taxpayer. For 2013 and subsequent taxation years, the budget proposed to extend the reassessment period for a tax year by three years if a taxpayer has failed to report income from a foreign property on their income tax return and Form T1135 was not filed, late filed or included incorrect or incomplete information concerning a foreign property.
Penalties for various omissions or missed filings are listed at the following CRA website Table of Penalties
