# T1135



## cheetah (Feb 10, 2014)

Even if I had more than 100k abroad during 2014, with my 2014 tax return I did not file a T1135. Since 2014 was my first year ever as a resident of Canada, I was told by my accountant that I was exempt.
I left Canada in late 2014 and have not yet returned . If I return now and spend the rest of 2015 in Canada , I will have to file a T1135 next year. Since I still had more than 100K abroad
during 2015, what will be the implications of filing
a t1135? Or would I be better off transferring all my money to Canada during 2015 and moving to
Canada only in Jan 2016? So I won't have to file a 
t1135 again. 
Thanks


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## Eclectic12 (Oct 20, 2010)

What does "left Canada in late 2014" mean in terms of your Canadian tax residency?

Are you a "factual resident of Canada"?
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

As I understand it, physically being outside of Canada does not automatically mean one is no longer a Canadian tax resident. Regardless of where one is in the world, where one is a Canadian tax resident - one has to file a Canadian tax return. I expect that as this would be the second year of being a Canadian tax resident, filing the second tax return would also mean having to file a T1135. 
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/tmprry-eng.html

Some other links:
http://www.advisor.ca/tax/tax-news/understanding-the-new-t1135-151683
http://www.advisor.ca/tax/tax-news/t1135-13-questions-and-answers-178286


I would think that confirming your tax residency plus it's implications would be the first step.


Then too, where one has emigrated from a tax perspective - there can be deemed dispositions of certain types of properties, triggering Canadian taxes (called "departure tax").
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/lvng-eng.html


Surely your accountant advised of these things when you left Canada?
Or was the question asked?


Cheers


*PS*
The good news is that if you need to file a T1135, you won't have to do so until April 30th, 2016 at the latest. 

The bad news is that it would appear that where one plans to be in Canada, the best time to be transferring foreign accounts (or reducing them to get below the threshold) seems to be during the exemption year. In your case, that would have been 2014.

The other bad news is that where a T1135 is missed that should be filed, the penalties are something like $25 a day to a maximum of $2500. Or if CRA determines it was knowingly done, then it's $500 a month. According to this link, where in past CRA waived the penalty for first time non-filers, it has switched to charging the penalty regardless.
http://www.advisor.ca/news/industry-news/a-late-t1135-can-be-costly-494


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## cheetah (Feb 10, 2014)

Thanks for the links. I will figure it out.
One more q please if you can answer it: 
How is the exchange rate benefit taxed?
If I held 250k USD at the time of becoming a resident of Canada ,
when the exchange rate was 1.08 cad for 1 USD. And now I convert that 
whole 250k USD to CAD in 2015 at the rate of 1.30 , how much tax roughly will
I have to pay on that benefit?
Thanks


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## kcowan (Jul 1, 2010)

You have to be more specific about what you were holding with the $250k and where.


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## cheetah (Feb 10, 2014)

Some of that in my USD account in Canada and some in my US checking account.
Does that matter?


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## kcowan (Jul 1, 2010)

So you are saying it is a cash holding in your Cdn account? I would say this does not qualify for T1135 reporting.


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## AltaRed (Jun 8, 2009)

kcowan said:


> So you are saying it is a cash holding in your Cdn account? I would say this does not qualify for T1135 reporting.


I agree holding of foreign currency in a Canadian domiciled financial institution does not count for T1135 reporting. But foreign currency in a foreign bank account does. 

To respond to Cheetah's other question, there is no income tax associated with changes in foreign exchange rates until the currency is exchanged for something else. Example: CAD exchanged for USD in 2010. Then some/all of that USD converted back to CAD in 2015. There will be a tax payable on the 2015 tax return on the 'gain' made on that money (first $200 excepted I believe). The OP needs to look up the CRA information on the specifics.


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