# T1135 Foreign Income Verificiation (New Form)



## liquidfinance (Jan 28, 2011)

I'm sure some members will already be completing this form and have more knowledge than I do on the matter. I've been looking over this form as I'm going to have to complete it for my 2013 tax return as I have been renting my UK property.

There are a few points to clarify for peace of mind. - I'm interested in any feedback / interpretations. 

The start of the form is straight forward.
Who you are (Individual etc)
Name, Sin, 
Individual Code. 2) for employed / unemployed 1) Self Employed
Address
Year of the tax return. - I presume this is the calendar year as I have completed below. 











Onto the next stage we begin to list our specified foreign property. 

As I don't have any foreign assets with a Canadian brokerage I will not be getting a T5 so can leave this box unchecked. 

Funds held outside Canada.

Natwest - I assume this can encompass all accounts under the one listing. savings, ISA & current account. 

Figures I believe are the maximum balance carried at a given point throughout the year and the closing balance on December 31st. I would assume the income portion of this would relate to any interest earned. I have no idea how you could have a loss here. Unless my money was in Cyprus. 

TD Direct Investing.

Now this I am unsure of. Dividends would be paid into this so I assume the cash balance should be listed in this portion. So the maximum held in dividends payments and cash was $2500 - I either withdrew or purchased more stock with it so my closing balance is 0 and the holding account doesn't pay interest so no money was earned. Would this be acceptable? I assume you don't need to list the portfolio balance as you are listing the stocks separately. 

Zopa UK - This is a peer to peer lender. I'm unsure if I should list this here or under indebtedness? 

What else should be listed under funds held? When you read the notes it even mentions pre paid credit cards!!! So I assume if I like a flutter on ladbrokes once in a while then any funds held with them should be listed. Of course this creates a grey area as I could win and list an income but as it's gambling it's non taxable? I'm thinking this could then be begging for an audit as you would be recording an income here which would then not be listed on the tax return. Should you include any funds held with a bookmaker?










Shares

So here I list my holdings. maximum cost during the year. Now they state when you move to Canada it's the FMV on the day you arrive. So if no transactions have taken place I assume this to be the "Maximum Cost"

In the Vodafone example it was $3500 when I arrived. I haven't purchased or sold anything and have received $200 in dividends. Is it correct that the end of year cost is the same? I believe from my interpretation that as no transactions have taken place the cost basis is the same and that the market price is not required in this field. 

Morrisons - $3500 value on arrival into Canada. $2500 at year end as I sold some of my holdings. $100 in dividends and $400 capital gain on the partial sale. 

Centrica - $3500 on arrival and later added to the holdings so my final cost is $5500 with $300 in income. Here as I type this I now realise my own mistake as the maximum cost amount should also be $5500 as this is my highest cost basis throughout the year.


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## liquidfinance (Jan 28, 2011)

Finally my residential property which I have let out. 

Value $150000 on arrival. No capital expenditure so $150000 recorded as present value. I assume if I was claiming CCA then you would reduce the end of year figure by this amount. 











Thanks for any input on this. I'm interested to know others thoughts and ensure I get this right when the time comes to file.


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## Guban (Jul 5, 2011)

Haven't looked at the new form, but what you've detailed looks good to me!

I was under the impression that stuff held in a Canadian brokerage that issues a T5 did not have to be included, but am unsure about this.


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## PuckiTwo (Oct 26, 2011)

Thks for the useful thread liquidfinance. Agree with Guban that you shouldn't have to include assets for which you receive a Canadian T5.
I understood that any foreign assets (property, pensions, equities, etc. over CAD 100k) will have to be reported on this form. But.......if you had no foreign ownership of a property, etc. but you held - let's say CAD 105k in MacDonalds or JNJ stks - would you have to fill out this form as well?


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## liquidfinance (Jan 28, 2011)

Pucki. I understand that if you receive a t5 then you don't need to report it. Or if its inside a registered account such as rrsp. So if you own 105k of JNJ and your broker gives a T5 it wouldn't have to be declared. But if there was no T5 then you would have to as the JNJ is over 100k of a foreign asset. 

I think there was a thread somewhere on here saying the big banks would likely provide a T5 but there maybe issues with the smaller brokerage. 

In my case when I moved here I had my sister and finance living with me who then continued to rent the house. Had the house never been rented I wouldn't have to complete it as you don't need to declare personal use property.


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## shanti (Dec 3, 2011)

I'm bit puzzled with the "Individual Code" on T1135. 
It says,
1. If the individual or the individual's spouse is self-employed, (I am not).
2. If the individual and the individual's spouse are both not self-employed.

Should I check "2"?


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## Parkuser (Mar 12, 2014)

PuckiTwo said:


> Thks for the useful thread liquidfinance. Agree with Guban that you shouldn't have to include assets for which you receive a Canadian T5.
> I understood that any foreign assets (property, pensions, equities, etc. over CAD 100k) will have to be reported on this form. But.......if you had no foreign ownership of a property, etc. but you held - let's say CAD 105k in MacDonalds or JNJ stks - would you have to fill out this form as well?


I am convinced that you do have to report your foreign shares held in a Canadian brokerage you got your T5 from. This can be done in Table 7, for some reason not shown by liquidfinance. You have to list by the country, the maximum value at the end of your "best" month during the year and at the end of the year. What bugs me, I've just discovered that I owned two Irish companies (via spin-off) - country code IRL. What bugs me even more, CRA permits to file this form electronically, BUT the Turbotax does not, so you have to fill it up, Netfile via Turbotax (very convenient I have to admit), then print the form (rather than the whole return), sign it and mail it to Ottawa. 

For the first couple of years I thought that getting and reporting a T5 from TD Waterhouse, paying tax, was sufficient and T1135 was not necessary. Big mistake. Theoretically there are terrible penalties for not sending it in. I "went on my knees" to CRA with a voluntary disclosure.


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## Parkuser (Mar 12, 2014)

liquidfinance said:


> Finally my residential property which I have let out.
> 
> Value $150000 on arrival. No capital expenditure so $150000 recorded as present value. I assume if I was claiming CCA then you would reduce the end of year figure by this amount.
> 
> ...


I think you are using T1135 form for TY 2013. You should probably use form for TY 2014. BTW, somehow Chrome does not load it, only Microsoft Explorer. 

http://www.cra-arc.gc.ca/E/pbg/tf/t1135/README.html


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## Guban (Jul 5, 2011)

Parkuser said:


> I am convinced that you do have to report your foreign shares held in a Canadian brokerage you got your T5 from. This can be done in Table 7, for some reason not shown by liquidfinance. You have to list by the country, the maximum value at the end of your "best" month during the year and at the end of the year. What bugs me, I've just discovered that I owned two Irish companies (via spin-off) - country code IRL. What bugs me even more, CRA permits to file this form electronically, BUT the Turbotax does not, so you have to fill it up, Netfile via Turbotax (very convenient I have to admit), then print the form (rather than the whole return), sign it and mail it to Ottawa.
> 
> For the first couple of years I thought that getting and reporting a T5 from TD Waterhouse, paying tax, was sufficient and T1135 was not necessary. Big mistake. Theoretically there are terrible penalties for not sending it in. I "went on my knees" to CRA with a voluntary disclosure.


They changed the rules just for taxation year 2013, so that you didn't have to report foreign assets when held with a Canadian brokerage, trying to simplify things. As of 2014, they reverted back to the report everything rules. My answer was for 2013, and should not be used for any other year!

http://www.thebluntbeancounter.com/2014/09/form-t1135-permanent-changes-for-2014.html


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## Guban (Jul 5, 2011)

Parkuser said:


> I think you are using T1135 form for TY 2013. You should probably use form for TY 2014. BTW, somehow Chrome does not load it, only Microsoft Explorer.
> 
> http://www.cra-arc.gc.ca/E/pbg/tf/t1135/README.html


liquidfinance asked the question over a year ago, and it was the correct form back then. BTW, I just used your link on Chrome and it worked just fine.


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## Parkuser (Mar 12, 2014)

Guban said:


> liquidfinance asked the question over a year ago, and it was the correct form back then. BTW, I just used your link on Chrome and it worked just fine.


Ooops, this was stupid of me. I have not noticed this was a revived old thread.

Last year you had to report it too, I am pretty sure. At first they wanted you to report every foreign security separately. Then they simplified the rules - you had to report separately foreign affiliates in Table 2 and the rest in Table 6 under the brokerage name, using CAN as a country code. At least this is how I understood the instructions. This form is so confusing I doubt anybody does it the right way - if there is a right way.

There is something wrong with (my) Chrome. The link to the web page works but you cannot download the form. The same problem is with the TD Waterhouse csv Excel data for the yearly trading summary, you cannot download them with Chrome but you can with Explorer. TD even warns you about it. They are working on it (since February).


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## heyjude (May 16, 2009)

Guban said:


> Haven't looked at the new form, but what you've detailed looks good to me!
> 
> I was under the impression that stuff held in a Canadian brokerage that issues a T5 did not have to be included, but am unsure about this.


Unfortunately, my accountant tells me it must be documented on the T1135 form, despite the fact that it duplicates the existing documentation. In fact, she did not realize that until this year, so we had to complete (simpler) forms for the last two years, and send a "voluntary declaration" letter. It is theoretically possible that penalties of up to $2500 per year will be assessed, but I have my accountant's assurance that since the omission was their error, they will cover those penalties if necessary. Ridiculous, isn't it?


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## avrex (Nov 14, 2010)

The T1135 is so confusing and infuriating.

I don't really want to file it. So, it's gotten to the point where I've rebalanced my portfolio, such that,
- my *registered* account is where I place most of my *USA* assets.
- my *non-registered* account is now mostly *Canadian* assets.

*Result:* I don't file a T1135.


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## avrex (Nov 14, 2010)

Even the Chartered Professional Accounts of Canada can't figure out how this form should be filled in for their clients. 

On Dec 15, 2014, they wrote a detailed letter to the CRA to raise concerns about the form. They further provided three recommendations for the CRA that could alleviate difficulties for many taxpayers who have to fill out this form.

The Chartered Professional Accountants of Canada are frustrated that they can't get proper answers for their clients.

They recently gathered and published 143 Questions about T1135 from a webinar of Chartered Professionals. 

For each question, they tried to publish an answer, with the answers falling into one of the following categories.
- An answer that is based on current CRA guidance.
- A direct answer to the webinar question, that was actually provided by the CRA.
- CRA comments requested/outstanding. For many questions they are still waiting for a CRA response. There is no guarantee that they will ever receive a response from the CRA for these questions.

How infuriating.


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## Parkuser (Mar 12, 2014)

avrex said:


> Even the Chartered Professional Accounts of Canada can't figure out how this form should be filled in for their clients. ...


Oh boy, this makes me feel good; I am not the only one, even professionals have a problem. For a few years I was not checking the box "Did you own or hold foreign property at any time in 200x with a total cost of more than CAN$100,000?" in my QuickTax. I was assuming that I do not because my margin account was at TD Waterhouse. So the form T1135 would not come up at all. Then I've read this column at the National Post
http://www.vancouversun.com/Survey/2637867/file+late+your+peril/2939005/story.html
and confirmed it reading a column by Andy Wong (got the copy of the column but cannot find the link, thanks Andy!) and scared to death send for a voluntary disclosure. It was accepted, no problem. But every year since then (2010) the rules change and I am puzzled anew.

BTW, I am surprised that for heyjude his accountant only goes back 2 years.


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## Parkuser (Mar 12, 2014)

Avrex, "Result: I don't file a T1135." I am slowly moving in the same direction, the problem is, the exchange rate is bad right now.


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## Parkuser (Mar 12, 2014)

*T1135 Foreign Income Verification (New Form)*

This is the column by:

Andy Wong
Guest columnist
Monday, April 5, 2010

Quick, write this down - $2,500 of unforgiving penalties per year. Got
your attention? Good, then let's get down to business.
The Canada Revenue Agency (CRA) has been asking if you own any
foreign property that cost more than C$100,000 since the 1998 tax
year. This question is noted on page two of your tax return. If you
answered "yes," you have to file Form T1135, Foreign Income Verification Statement, with
your tax return or mail it in if you file your return electronically.
This foreign-reporting question is the taxman's way to uncover potential tax evasion that
uses offshore tax havens to hide money. If you play games and answer "no" when it should
be a "yes," you are playing with fire. The penalty for failing to file Form T1135 is $25 a day to
a maximum of $2,500. And that's for each year of non-filing!
Take the case of Leclerc vs The Queen, Tax Court of Canada, Feb. 18, 2010, where the
taxpayer had late-filed his Form T1135 for 2003 and 2006. He was automatically assessed
$2,500 penalty for each of those two years. In court, he pleaded he didn't mean to file
those forms late; he was distracted during that period due to a family illness; he thought
penalties did not apply because there are no taxes owing; and that the penalties were way
too high. Unfortunately for him, the judge ruled the penalties were correctly assessed by
the CRA and rejected the taxpayer's appeal for leniency.
What is foreign property? The devil is in the details so read Form T1135 (Google "T1135")
and its accompany notes. Here are some common examples: Foreign property includes cash,
stocks, and land and building not in Canada.
Do you own a bank account in the U.S.? That is definitely a foreign property. You will need to
file Form T1135 if that account has more than C$100,000 at any time during the year.
Did you move to Canada recently and still own your home in, say, Australia? If that is so,
your Australian home may be a "foreign property." It is, if the property is rented more than
50 per cent of the time during the year. It isn't, if you kept the property for your own use. If
it is rented more than 50 per cent of the time, and was valued at more than C$100,000
when you came to Canada, you have to file the Form T1135.
If a relative in a foreign country passed away and left you with more than C$100,000 (in
cash) which remains overseas, you are considered to own foreign property and will have to
file the Form T1135.
If you own mutual funds through a Canadian mutual fund provider, i.e., a Canadian financial
institution, you are not considered to own foreign property even if your mutual fund invests
entirely in foreign stocks.
On the other hand, you are considered to own foreign properties if you own foreign
corporation stocks directly, that is, through a broker or your online stock trading account.
Therefore, if you own more than $100,000 of foreign stocks directly - at any time during the
year - you have to file the Form T1135
The filing deadline for the Form T1135 is April 30, the same as your personal tax filing
deadline.


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## heyjude (May 16, 2009)

Parkuser said:


> Oh boy, this makes me feel good; I am not the only one, even professionals have a problem. For a few years I was not checking the box "Did you own or hold foreign property at any time in 200x with a total cost of more than CAN$100,000?" in my QuickTax. I was assuming that I do not because my margin account was at TD Waterhouse. So the form T1135 would not come up at all. Then I've read this column at the National Post
> http://www.vancouversun.com/Survey/2637867/file+late+your+peril/2939005/story.html
> and confirmed it reading a column by Andy Wong (got the copy of the column but cannot find the link, thanks Andy!) and scared to death send for a voluntary disclosure. It was accepted, no problem. But every year since then (2010) the rules change and I am puzzled anew.
> 
> BTW, I am surprised that for heyjude his accountant only goes back 2 years.


Heyjude is surprised that you think she is a man. &#55357;&#56832;


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## Parkuser (Mar 12, 2014)

heyjude said:


> Heyjude is surprised that you think she is a man. ��


I'm sorry. I meant no offense.

On the other hand...
http://en.wikipedia.org/wiki/On_the_Internet,_nobody_knows_you're_a_dog#/media/File:Internet_dog.jpg


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## AltaRed (Jun 8, 2009)

heyjude said:


> Heyjude is surprised that you think she is a man. 😀


There is a tendency for the jocks on business/financial/technical Internet forums in particular to make masculine gender assumptions rather than using better forms like s/he or OP or 'you there', etc.


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## heyjude (May 16, 2009)

Parkuser said:


> BTW, I am surprised that for heyjude his  (her) accountant only goes back 2 years.


Because that's the duration of our professional relationship.


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## Allie (Apr 16, 2015)

Hope someone can help me with some T1135 questions.

I am helping a family member with his tax return (he immigrated about a year ago and still has term deposits in his home country banks, has to complete T1135 as it is the second tax return)
Tried to call CRA but the number is always busy :-(

My questions are:
*1) Regarding exchange rates:* if I understand correctly, CRA says to use annual average exchange rates for Max balance (i.e. determine max value in local currency, then convert to cad using avg annual rate) and for end balance use year end exchange rate.

This makes sense for deposits that were on the account for all or most of the year.

However, what if a bank deposit was made at year end (end of December) and exchange rate was very different (much lower) than annual average (due to sharp declines towards year end). When I convert max amount using avg exchange rate for the year it becomes much larger however the rate in that month was much lower all month so that max amount number just does not make sense and is much higher than end balance (converted at year end exchange rate) and the difference is literally several days so it make seem like the money disappeared somewhere. 

Would it be acceptable to use average exchange rate for that month for such deposits to calculate maximum balance in CAD? Or maybe use exact day average rate?


*2) Does cash kept at home (i.e. personal residence) at some time during the year needs to be included on the form too? *
It is normal in his country to keep some savings in cash at home (typically in stable currency, as the local currency is very unstable and banking system has issues too with banks collapsing and big delays in getting money back or not getting them back at all - diversifying between banks and cash is the norm there). 

He was buying $$ throughout the year with the goal to bring those cash savings to Canada when coming back from his trip (will properly declare at customs of course as required). But does this have to be included in T1135 for the year? We feel that it probably should, especially if it is a relatively large amount. 
However, it is also hard to calculate exactly to the dollar (he still spends several month of a year in his home country wrapping up some things before permanent move, so obviously he has cash while there - some of it would be personal use to live on, some kept to be brought to Canada when he goes back, bank transfers are complicated in his country and there are restrictions)

The form notes mention "cash in depository" needs to be reported as well as "other" tangible assets (if not for personal use)
We want to be transparent (do not want any issues with CRA) but he is just really concerned about this cash part and how to report in T1135 (hard to do exactly to the dollar, unlike for bank balances where you can see or calculate daily balances).


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## Jaberwock (Aug 22, 2012)

If I have a US dollar account at a Canadian brokerage, is it foreign property because it is designated in a foreign currency.

Are the US dollars in wallet foreign property?


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## AltaRed (Jun 8, 2009)

No. It is only those assets domiciled outside the country.


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## dime (Jun 20, 2013)

After filing for this year I'm more puzzled than ever. The T1135 is completely confusing for the professional tax accountants, let alone individuals filing using tax software. The requirements change every year and little if any, let alone clear instructions are available, yet hefty penalties are warned... there's something wrong with this picture. Let alone that's I've already reported all this information with my regular return, and the broker also sent in all my info as well. Nuts! 

Rant over... on to my questions:

From what I can tell we DON'T include the USD cash held in the brokerage when calculating the max fair market value and year end market value?

. Does anyone know if the section 7 for US dollar stocks & ETFs held in a Canadian broker would be the same figure for the T5 as it is on the T1335 income (and then converted to Canadian dollars)? From what I can tell any foreign / withholding taxes paid are not subtracted?


My T5 gives two figures. Anyone know the difference?
(3) TOTAL GROSS FOREIGN INCOME and (5) TOTAL GROSS INCOME FROM FOREIGN SOURCES 
They appear to add up to the figure on the T5 slip.


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