Personal Finance

$100k Foreign Property Question On Income Tax Return

  • Last Updated:
  • Apr 26th, 2021 10:45 am
[OP]
Newbie
Mar 27, 2021
5 posts

$100k Foreign Property Question On Income Tax Return

I am a long time owner of some US stocks that were originally purchased well over a decade ago and are being held at a US based transfer agent(unregistered account). With the recent run up of the US stock market they now total in market value of slightly over $100k CDN. My adjusted cost base, however, is significantly less than this since I originally bought them a long time ago.

While doing taxes I see the usual question of "Do you own or hold specified foreign property where the total "cost" amount of all such property ...was more than CAN $100,000?"

I interpret this as "cost" not "market value". When I read a gov of canada web site it seems to imply "cost" rather than market value.
Passage from the web site.

"Cost amount and the $100,000 reporting threshold
Is the $100,000 threshold based on the fair market value of the property?

No, it is based on the cost amount. The cost amount is defined in subsection 248(1) of the Income Tax Act and generally is the "adjusted cost base" and not the fair market value."

https://www.canada.ca/en/revenue-agency ... 35.html#h2

Have any of you long time US stock holders dealt with this foreign stock ACB vs market value situation before? (hopefully an accountant can comment). Based on adjusted cost base, I don't think that I would have to fill out a T1135 form. Just trying to figure out what the right thing to do here is.
In any case I have been reporting the dividends annually and have been paying tax on the foreign income.
5 replies
Newbie
May 12, 2006
19 posts
16 upvotes
You have it right, as long as your total ACB across all foreign stock holdings (whether held by a Canadian securities dealer or not), does not exceed C$100,000, you do not have to file the T1135. Note that the requirement is triggered if you exceed the C$100,000 threshold at any time during the tax year, even though you may be under by year's end.
[OP]
Newbie
Mar 27, 2021
5 posts
Thanks for confirming. Since I am not actively buying/selling US stocks in unregistered accounts, the second scenario you describe, some down fluctuation during the year, would not happen to me unless I actually sold some stock.
Newbie
May 12, 2006
19 posts
16 upvotes
The second scenario is applicable where you have purchased additional foreign assets to breach the C$100,000 ACB (cost) threshold at any time during the year, even if you sold some during the year to fall below. The fair market value of "specified foreign property" and their fluctuations during the year do not affect the ACB that is used to determine whether the T1135 is required.

Since you are not actively buying or selling US stocks in unregistered accounts, it shouldn't matter. However, you could trip the C$100,000 threshold in the future if you buy additional foreign stocks in a Canadian non-registered brokerage account, or if you sold your U.S. stocks and the >C$100k proceeds found their way, even temporarily, into a bank account you may have in the U.S. If the proceeds went into a USD bank account with a Canadian bank, then it wouldn't be counted as "specified foreign property".
Jr. Member
Jul 8, 2019
130 posts
139 upvotes
Also, if those stocks at the US broker are inside an IRA or 401k (or any other foreign retirement account), they are also excluded from T1135 reporting requirements.

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