The following has been extracted directly from the CRA website, www.cra.gc

Starting with the 2013 taxation year, Canadian taxpayers who hold specified foreign property with a cost amount of over $100,000 in total, at any time in the taxation year, are required to provide additional information to the Canada Revenue Agency (CRA). The criteria for those who must file Form T1135 have not changed; however, the new Form has been revised to include more detailed information on foreign property.

Specified foreign property that must be reported to the CRA includes:

  • Funds held outside Canada;

  • Shares of non-resident corporations (other than foreign affiliates);

  • Indebtedness owed by non-residents (other than from foreign affiliates);

  • Interests in certain non-resident trusts;

  • Real property situated outside Canada (other than personal use property and real property used in an active business); and

  • Other types of foreign property such as intangible property not used in a business and certain rights under contract.

In addition, taxpayers subject to the reporting requirement must identify the country code that is applicable for each specified foreign property, the maximum and year-end cost amounts of the property, the income or loss, and capital gain realized from each property during the taxation year. The web-based fillable form contains tables that are expandable based on the number of properties to be reported for the taxation year.

Revised Form T1135 excludes certain property from the detailed reporting requirement. The reporting exclusion provides that where the taxpayer has received a T3 or T5 from a Canadian issuer in respect of a particular specified foreign property, the details of that particular specified foreign property do not have to be disclosed in one of the tables on Form T1135.  Whether the reporting exclusion applies must be determined for each specified foreign property and for each taxation year during which the property was held. For example, if there are numerous properties held in one investment account, only those properties for which a T3 or T5 was issued for a particular taxation year would be subject to the reporting exclusion in that particular year.

A specific property may be subject to the reporting exclusion in one year and not in another year depending on whether it earned income for which a T3 or T5 was issued.

The taxpayer is still required to file  Form T1135 by the filing due date even if a T3 or T5 was issued in respect of all specified foreign property held during the taxation year. In this case, the taxpayer would complete the identification information and check the reporting exclusion box on Form T1135. The reporting exclusion is administrative and is not contained in the applicable provisions of the Income Tax Act.

The Revised Form T1135 applies to 2013 and subsequent taxation years.  The new Form was released on June 25, 2013 and applies to taxation years ending after June 30, 2013. Form T1135 must be filed with the CRA on or before the filing due date of the related tax return in the case of a T1, T2 or T3 return, or the filing due date of the T5013 Partnership Information Return in the case of a partnership. The old Form T1135 will still be accepted for taxation years that ended prior to July 1, 2013.

Other information

Form T1135 is available on the CRA web site in a fillable/savable PDF version.on the CRA website.

Currently, this Form cannot be electronically filed. It must be paper-filed with the CRA, either attached to the paper-filed tax return or partnership information return, or separately and sent to the Ottawa Technology Centre by the filing due date of the applicable income tax return or partnership information return. Detailed instructions are provided on the back of the Form.

For taxpayers who have ticked the “Yes” box on their tax returns indicating they held specified foreign property in a taxation year with a total cost of more than $100,000, a reminder will be included on their Notice of Assessment of the obligation to file Form T1135. These reminders will start with the 2013 taxation year. As well, the ability to electronically file Form T1135 is being developed and will be announced by the CRA when this becomes available.

For the 2013 and subsequent taxation years, the period within which the CRA can reassess a taxpayer`s tax return is extended by an additional 3 years if the taxpayer has failed to report income from a specified foreign property on their income tax return; and Form T1135 was not filed on time by the taxpayer, or there is a false statement or omission on Form T1135 for that particular taxation year.

In addition, there are certain penalties that are applicable for failure to file Form T1135 by the reporting deadline, or for making a false statement or omission with respect to the required information. These penalties will continue to apply in regard to the new Form T1135.

We recommned you review the form, and begin to collect the relevent information that will need to be reported.

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