Foreign Income tax reporting

On your personal or corporate tax return you will be asked if you owned foreign property at any time in the year with a cost amount over $100,000?  If you do, you are required to file  form T1135  – Foreign Income Verification Statement with the Canada Revenue Agency.  The form provides detailed instructions on what types of property are included in the calculation.

The reason this form is in the news of late is because CRA  is showing  no tolerance for late filing this form.  It is due annually on or before the due date of your income tax return.  The penalties for late filing are substanstial — $25.00 per day to a maximum of 100 days — $2,500.

I have known of cases where the individual has not bothered to file their tax return by April 30th because they knew they were going to receive a refund due to a contribution to their RRSP.  When they got around to filing they found they were assessed $2,500 plus interest for late filing the T1135.

For further information see Jamie Golombek’s article:  http://www.jamiegolombek.com/pdf/AER%20Oct%202010%20Golombek.pdf

The T1135 form and instructions are available from CRA at:  http://www.cra-arc.gc.ca/E/pbg/tf/t1135/t1135-07e.pdf

Property of Marino Vereecke Professional Corporation, CA