Help! T1135 - Inheritence

Kittypanda wrote: ↑I would like to ask expert's opinion about my situation re T1135.

So go to an accountant or tax lawyer. I'm just a random person on the internet.

Kittypanda wrote: ↑Recently my mother contacted me saying I need to file property in my country (in my case, funds in my personal bank accounts) otherwise I would get serious penalty for not filing.

Penalties from this other country? Or from Canada.

Kittypanda wrote: ↑1. I have a personal bank account in my country that I am aware and to my knowledge, it's been always well under CAD 100,000 so never filed T1135 as there is no requirement if it's under CAD 100,000.

Ok, but you still need to declare the interest income from that bank account on your Canadian taxes. If there is a tax treaty between Canada and that other country you won't be taxed twice.

Kittypanda wrote: ↑2. My father passed away about 20 years ago when I was still in teenage.

My condolences.

Kittypanda wrote: ↑I assumed I probably received inheritance from my father but that was all under my mother's control and I never knew until recently how much I actually received from my father.

Did you receive it or not? Twenty years is a very long time to distribute an estate to the heirs. Have you ever seen the will? In many countries wills are probated and public documents.

Kittypanda wrote: ↑The inheritance is deposited in two separate accounts.

And whose name is on those accounts? Your mother? The estate? A trust? You? Someone else?

If your name is on those accounts, you must have signed something to open those accounts.

Kittypanda wrote: ↑3. Interests for those 3 bank accounts are super low, anyway taxes for those interests are all taken care of in my country's tax return so I guess I am not too worried about interests earned (seriously really low) not reporting CRA.

If those are your accounts, you still need to declare the income from those accounts on your Canadian taxes. If there is a tax treaty between Canada and that other country you won't be taxed twice.

And frankly, if income earned on those accounts is "seriously really low" then you messed up big time.

If you had invested in the S&P500 index for 20 years, you would have over 300% total return. If you had invested in the Dow Jones for 20 years, you would have over 400% return. That far exceeds any tax concerns.

Kittypanda wrote: ↑4. I have never transferred my money in my country to Canada.

Not relevant. Canada taxes you on your worldwide income, even if you never bring that income into Canada.

Kittypanda wrote: ↑I would like to know what the best option for me to report about this.

Start with the simple question: Whose name is on these accounts?

If these are your accounts, then you have a problem. Go see a tax lawyer for advice.

If these are not your accounts, then you don't have a problem. Whoever owns those accounts might have a problem.

M8Rxmjsik

Thank you so much for taking time to reply to me.

I meant penalty from Canada.
I am pretty sure those are my account, (will check my mother more details) so I think my best option is to seek for professional help.

10+ years in Canada, not a citizen, just permanent resident?

Inheritance left 20+ years ago in a different country? You had nothing to do with Canada at that point in time.

Canada has nothing to do with that.

Look up an international tax accountant or lawyer, or both, and they'll properly advise you.

On this forum, you wont get professional advice, just personal opinions from people, BUT I can tell you Canada doesnt control past financial events in foreign countries AND on foreign residents who had nothing to do with Canada. For that, you dont need a professional.

You might need to declare interest gains...MAYBE, and i say maybe because a permanent resident is not a citizen, and there's different rules that apply to certain things. That's something a professional should be able to clarify.

OP, your post is all over the place. Invest some $ and go seek proper advice.

Buggy166
Thank you for your comment.
Yes, I understand this forum gives me personal opinions not professional but still helps me what direction I should consider.

In my non-professional opinion... You should go talk to an tax lawyer. You were supposed to declare any accounts/property when the value exceeded $100k. Failure to do so could result in a penalty of $2500 and up.

https://www.countertax.ca/blog/how-the- ... o-about-it
https://www.canada.ca/en/revenue-agency ... lties.html

If you voluntarily disclose the information, you may get away without paying the penalties. If you try to sneak it in by simply starting to declare it now, they may start digging on their own, and find out how long you've had the accounts, which would remove the "voluntary disclosure" option.

The fact that you made "very little interest" and you paid taxes on that interest to a foreign government isn't the point, in this case. It's the fact that you had a foreign asset that you didn't disclose that's the issue. And your lawyer may advise you that you don't have to voluntarily disclose, but may just amend your tax returns for those years.

One other thing to keep in mind is that even if you paid taxes to the foreign government, you were still supposed to declare the income and taxes paid, AFAIK. If Canada has a tax treaty with that government, then the taxes paid would have reduced the taxes you'd have to pay in Canada. If that government doesn't have a tax treaty with Canada, then you WOULD have to pay taxes on the income you made.

I'm not a tax accountant or lawyer, and I've never played one on TV. So take this all with a grain of salt and go talk to a professional. I'm advising a tax lawyer as opposed to an accountant to ensure you're covered by solicitor-client privileges.

C

I believe the amount of interest not declared since low not that much an issue BUT not filing T1135 carries with it penalties for not filing, like 2k each year or something like that.

Filing voluntary disclosure ok BUT make sure for latest tax year it is at least one year since file that return else not allowed voluntary disclosure and could get penalty.

Best to get professional advise as suggested above, good to research yourself as that may help.

From CRA https://www.canada.ca/en/revenue-agency ... ogram.html

Conditions of a Valid Application
28. A VDP application must meet the following five conditions to be valid and to qualify for relief. The application must:

be voluntary;
be complete;
involve the application or potential application of a penalty;
include information that is at least one year past due; and
include payment of the estimated tax owing.

More info: https://www.canada.ca/en/revenue-agency ... rview.html

Kittypanda wrote: ↑ Buggy166
Thank you for your comment.
Yes, I understand this forum gives me personal opinions not professional but still helps me what direction I should consider.

Just not your luck. Sometimes this happens. The first person who replied said something like "So go to an accountant or tax lawyer", others will join in on the same answer "go to a professional". Sometimes, the first reply offers insightful experience, others reply with different helpful perspectives.

I see your point, you understand the replies here are not professional advice but helps in what direction you should consider or tells you that the professional that you consult later is giving you bad advice after you have enough information from posting here to have an idea what direction to take.

Some people here do give sound advice based on their profession or experience, if you have seen threads like "Ask me, I'm a CPP expert", "Ask me, I'm a EI expert" or "Ask me, I'm a Tax consultant" here at RFD. Hopefully such a person will reply and offer you some insight.

My father passed away about 20 years ago when I was still in teenage. I assumed I probably received inheritance from my father but that was all under my mother's control and I never knew until recently how much I actually received from my father.

If those money are held in your mother's account, then you do not "own" the money and thus have nothing to report during those "20 years". You will have to report once the funds are held in your name. So you don't really have to worry about 20 years back, probably to account for this from the time the funds are held in your name.

CNeufeld
Thank you for your helpful reply.
My country and Canada has a tax treaty and tax for those interest made have been paid.

georvu
Thank you for your reply!

stack21
Thank you, you exactly explained what I am looking for from this forum.
According to my mother, those money has been always in my account. So if I do VDP, I will have to go back the year I came to Canada.

Kittypanda wrote: ↑ stack21
Thank you, you exactly explained what I am looking for from this forum.
According to my mother, those money has been always in my account. So if I do VDP, I will have to go back the year I came to Canada.

You really should spend the money and see a good accountant before you begin talking with the CRA. It would be well worth paying a professional who will handle this on your behalf and avoid having you get into any trouble unnecessarily.