Personal Finance

CRA .. foreign accounts?

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  • May 24th, 2020 10:32 am
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Aug 11, 2003
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C-53

CRA .. foreign accounts?

RFD,

Do you know since when/what year did CRA start inquring about citizens owning foreign assets over $100k CAD?

I recently filed my taxes and noticed that item.. I've not noticed it before.
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Deal Addict
Sep 19, 2009
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Toronto
T1135 Foreign Income Verification Statement
Who has to report?
Form T1135, Foreign Income Verification Statement, must be filed by:

Canadian resident individuals, corporations, and certain trusts that, at any time during the year, own specified foreign property costing more than $100,000
certain partnerships that hold more than $100,000 of specified foreign property

What property has to be reported?
Specified foreign property is defined in subsection 233.3(1) of the Income Tax Act and includes:

funds or intangible property (patents, copyrights, etc.) situated, deposited or held outside Canada
tangible property situated outside Canada
a share of the capital stock of a non-resident corporation
shares of corporations resident in Canada held outside Canada
an interest in a non-resident trust that was acquired for consideration
an interest in a partnership that holds a specified foreign property unless the partnership is required to file Form T1135
a property that is convertible into, exchangeable for, or confers a right to acquire a property that is specified foreign property
a debt owed by a non-resident, including government and corporate bonds, debentures, mortgages, and notes receivable
an interest in a foreign insurance policy
precious metals, gold certificates, and futures contracts held outside Canada
... and penalties for non-compliance
Deal Addict
Sep 19, 2009
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doomhammer wrote: RFD,

Do you know since when/what year did CRA start inquring about citizens owning foreign assets over $100k CAD?

I recently filed my taxes and noticed that item.. I've not noticed it before.
I am certain that it was always mandatory in the last 30 years and the $100k CAD threshold was never updated.
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Dec 11, 2005
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I am quite sure that a huge percentage of the population does not accurately file their T1135 because everyone assumes stocks are exempt, when they are not.

It's one of the most vague, strange, and arguably nonsensical things in the current tax system that you have to double-report your US securities in this way, especially since they construe no tax burden.

It really needs to be escalated to MPs for an overhaul.

Read this story, its quite interesting and if you ever get peanalized for not filing, could be good case law to fall back on. Basically the judge threw the penalties out because of the vagaries around it. https://business.financialpost.com/pers ... -this-form
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Deal Addict
Sep 19, 2009
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brunes wrote: I am quite sure that a huge percentage of the population does not accurately file their T1135 because everyone assumes stocks are exempt, when they are not.

It's one of the most vague, strange, and arguably nonsensical things in the current tax system that you have to double-report your US securities in this way, especially since they construe no tax burden.

It really needs to be escalated to MPs for an overhaul.

Read this story, its quite interesting and if you ever get peanalized for not filing, could be good case law to fall back on. Basically the judge threw the penalties out because of the vagaries around it. https://business.financialpost.com/pers ... -this-form
Brokers are only reporting dispositions of securities to CRA - realized taxpayer income which trigger the tax liability. Open positions, which represent taxpayer assets, are not reported by brokers. This is the whole purpose of T1135.

I would not call this double reporting but seems incorect and discriminatory the fact that similar Canadian assets are not being reported. If the Canadian parliament establishes a need for the government to log & track assets held by taxpayers, they should get the information directly from brokers, the way they do it for TFSA accounts.
Deal Addict
Dec 9, 2003
4925 posts
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Calgary
Technically, lets say you have a USD trading account holding foreign ADRs which are traded in new York. If you hold Diageo you need to report this as French foreign holding. Or BP as British foreign holding. etc etc Even though they are all in USD they are not American holdings per CRA. And you need to do the currency conversion monthly to find the highest value through the year and at year end for each group of foreign holdings. The reporting has got tougher in the past five years. Check it out.

But as a minimum you need to submit a T1135. There are real penalties for not doing this. What do you have to hide?
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Deal Fanatic
Feb 4, 2015
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Canada, Eh!!
There is also voluntary disclosure if have forgotten in past to fill T1135.

https://www.canada.ca/en/revenue-agency ... 35.html#h9

Just be careful on timing for prior year voluntary disclosure... something like... can only do voluntary disclosure if past 1 year due. Eg. Presume it is Feb 2020. Could not voluntary disclosure 2018 T1135 in Feb 2020 as not yet one year past due... so just wait BUT for prior years like 2017 and before no issues.

Really is burden paper pushing make jobs initiative. All information readily available from Canadian brokerages.

Also if understand correctly... FB stock held with Canadian brokerage needs to be reported but USD with same brokerage does not. Makes for interesting T1135 year over year if say hold many US stocks [over 100K CAD cost] one year and then sell following year and hold just USD cash. Then buy US stocks [over 100K CAD cost] the third year. Disconnect in that T1135 only filed in years 1 and 3 but if CRA compares max and closing balances there is a disconnect... mind you it is easy to explain.

Should really be for true foreign accounts, broker holdings, etc.
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Jul 8, 2018
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GTA
andrew4321 wrote: Brokers are only reporting dispositions of securities to CRA - realized taxpayer income which trigger the tax liability. Open positions, which represent taxpayer assets, are not reported by brokers. This is the whole purpose of T1135.

I would not call this double reporting but seems incorect and discriminatory the fact that similar Canadian assets are not being reported. If the Canadian parliament establishes a need for the government to log & track assets held by taxpayers, they should get the information directly from brokers, the way they do it for TFSA accounts.
Getting the information from brokers is impractical because:

1) If a taxpayer held $100,000 worth of foreign assets across two or more brokers, any individual broker would be unaware the threshold has been crossed, and

2) Many Canadian taxpayers hold assets with foreign brokerages that may or may not comply with Canadian reporting requirements and operate outside of Canadian jurisdiction.
Deal Addict
Dec 9, 2003
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KyleTO wrote: Getting the information from brokers is impractical because:

1) If a taxpayer held $100,000 worth of foreign assets across two or more brokers, any individual broker would be unaware the threshold has been crossed, and

2) Many Canadian taxpayers hold assets with foreign brokerages that may or may not comply with Canadian reporting requirements and operate outside of Canadian jurisdiction.
First of all, it doesn't matter how difficult it is, you have a legal obligation to provide the information.

Second - even if the broker doesn't provide you the detail, you have your own detail on holdings and price. I think you would be better off providing an estimate to CRA (and explaining if necessary why it may not be 100% accurate) than just ignoring the reporting obligation.
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