New Foreign Income Reporting Requirements for Canadian Taxpayers: An Update
In an earlier blog post, we discussed the new Stop International Tax Evasion Program and the fact that Canada Revenue would be redesigning its Form T-1135, Foreign Income Verification Statement. Canada Revenue has now released the new T-1135 form outlining the new reporting requirements for income earned from assets outside of Canada.
Now Canadian taxpayers must report additional information on their foreign, income earning assets outside of specifying the cost basis and the aggregate income earned. CRA will now require taxpayers to provide the following information on the new T-1135:
- The name of the financial institution holding the foreign assets, or for stock in a foreign corporation, the name of the corporation;
- The maximum value of each asset during the year;
- The income earned from the asset; and
- The country in which the asset is held.
If you hold non-Canadian assets through a Canadian financial institution and that institution issues a Form T-5 or T-3, you will not be required to report these assets. Nor are you required to report real property held outside of Canada for personal use or that is used in an active trade or business.
Canadian taxpayers are advised to keep detailed records of their non-Canadian holdings in order to more easily complete this form and comply with Canada Revenue regulations. If a taxpayer fails to file a T-1135, files late, or files incorrect information, Canada Revenue is now allowed to extend the normal three year assessment period out an additional three years. This new penalty applies to tax years beginning in 2013.