# Foreign Property, T1135, and non-currency-hedged ETFs (VUN, XEF, etc)



## telefantastik (May 20, 2009)

Hi all,
Would foreign property declaration via T1135 apply to the new non-currency-hedged ETFs, like VUN, XEF, etc.? These are just wrappers of underlying US-listed ETFs (e.g. VTI), so on the surface it sounds like the same rules should apply - though I'm not sure. What do you think/know?

Cheers!
-t


----------



## CanadianCapitalist (Mar 31, 2009)

telefantastik said:


> Hi all,
> Would foreign property declaration via T1135 apply to the new non-currency-hedged ETFs, like VUN, XEF, etc.? These are just wrappers of underlying US-listed ETFs (e.g. VTI), so on the surface it sounds like the same rules should apply - though I'm not sure. What do you think/know?
> 
> Cheers!
> -t


Since these ETFs are domiciled in Canada, they are not considered foreign property for T1135. Also, these ETFs are not considered US assets for US Estate Tax purposes.


----------



## Guban (Jul 5, 2011)

With the new T1135, I am unsure if even VTI would have to be reported for tax years 2013 and later. The broker should issue you a T3 or T5 for these ETFs, so according to the instructions, these assests should be excluded.

See:
http://www.cra-arc.gc.ca/E/pbg/tf/t1135/t1135-13e.pdf

Does anyone else interpret the instructions this way?


----------



## My Own Advisor (Sep 24, 2012)

I had a tax accountant vett this post on my site, before new T1135 though:
http://www.myownadvisor.ca/2012/11/...eporting-doesnt-need-to-be-a-foreign-concept/


----------



## telefantastik (May 20, 2009)

CanadianCapitalist said:


> Since these ETFs are domiciled in Canada, they are not considered foreign property for T1135. Also, these ETFs are not considered US assets for US Estate Tax purposes.


Thanks!



Guban said:


> With the new T1135, I am unsure if even VTI would have to be reported for tax years 2013 and later. The broker should issue you a T3 or T5 for these ETFs, so according to the instructions, these assests should be excluded.
> 
> See:
> http://www.cra-arc.gc.ca/E/pbg/tf/t1135/t1135-13e.pdf
> ...


Curious, good call on this one.
For everyone else, this is in reference to this clause:


> Categories of Specified Foreign Property
> Where the reporting taxpayer has received a T3 or T5 from a Canadian issuer in respect of a specified foreign property for a taxation year, that specified foreign
> property is excluded from the T1135 reporting requirement for that taxation year.


----------



## AltaRed (Jun 8, 2009)

The wording is poor on that last part... I would have said


> Categories of Specified Foreign Property
> Where the reporting taxpayer has, *or would have otherwise*, received a T3 or T5 from a Canadian issuer in respect of a specified foreign property for a taxation year, that specified foreign
> property is excluded from the T1135 reporting requirement for that taxation year.


Not all foreign assets have income in any given year and therefore would not have been covered by a T3 or T5. But they would have if there had been income, they are considered exempt.


----------

