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Email this10:38 pm
March 3, 2022
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This is my 1st year filing without using an accountant, Im using Turbo Tax. It was going well until I came across the T1135. My wife and I are canadian citizens and we have 4 rental properties in the USA. I’m filling out the Foreign Income Verification Statement (T1135). The form asks “Max cost amount in 2021” & “Cost amount at year end” & “Income”. I assume “Income” is rent received minus expenses…Yes?? How do I calculate “Max cost in 2021” and the “Cost amount at year end”? Thanks for any help.
In checking previous years tax returns my accountant selected the cost range of $100,000 - $250,000. I wondered if I should just use similar numbers that were used in pervious years.
11:02 am
April 16, 2020
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This might help if you haven't seen it :
https://www.canada.ca/en/reven.....t1135.html
Per that link : I have not dealt with the case of owning foreign real estate and earning rental income, but for foreign stocks or bonds, I have always reported "Cost amount" figures as of date of purchase ( price * exchange rate ) and therefore "Max during the year" and "Year end" amount are always the same ( unless there was a sale or other disposal of the property during the year ).
However, I would note also :
- the comments on the link above about different scenarios for "Real Property"
- and on the T1135 form itself about "persional property" and/or "property used or held exclusively in carrying on an active business" ... whether your rental properties constitute "an active business" is beyond my ability to comment, but I believe I've seen comments on other threads on this topic. I'll see if I can find them again.
Hope this helps : there's a lot to wade through.
11:09 am
April 16, 2020
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Sorry, to be clear : the above URL suggests that it might be relevent only to non-residents, but I believe it to be generally applicable (although there may obviously be nuances for non-residents).
The main CRA T1135 page is at :
https://www.canada.ca/en/reven.....t1135.html
and the above link (plus other useful ones) is from that page.
11:33 am
April 16, 2020
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The discussions I have misremembered were in these threads about active stock trading in a TFSA :
https://www.highinterestsaving.....ng-guilty/
https://www.highinterestsaving.....s-trading/
Some of the same principles may (or not) apply to rental properties being "active business" (or not), but again that's way beyond my scope.
2:18 pm
October 27, 2013
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It is my view Cost does not change at any time unless there were acquisitions or dispositions. IOW, if you keep the same properties year in and year out, there should be no difference from year to year in "Max cost during 2021" and "cost at end of year".
I would also assume Income is net of operating Expenses, just like mutual fund or ETF investment income is net of MER.
12:01 pm
April 7, 2021
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I have used Studio Tax for many years but this is the first year I had to include form T1135. There are often "did you remember to do this or that" messages that do not apply if they have already been done. There was a message regarding T1135 but I ignored it because it was included. I now wonder if I misread a flag that could have said that it had to be submitted separately, but if so, there was no explanation about how to do it.
I am advised the penalties for not submitting the form is $25.00 / day to a maximum of $2,500. CRA advised their program does not indicate if the form was received and I could not get an answer asking if CRA notifies taxpayers if they do not have this information. I was also advised that I could have asked for confirmation if requested in writing with a self addressed return envelope. How could this be done if filed electronically? I was not told this in April when I called and mailed the form to them just in case it was not received electronically.
Regardless of how this turns out, the process appears to be very unfair to taxpayers who want to follow the rules. I wonder about why this is even a requirement for people who hold foreign investments with a Canadian broker because CRA already has this information.
Does anyone here know if Studio Tax requires users to file T1135 separately, even if it was included with the regular filing? I am awaiting a reply from Studio Tax.
12:41 pm
October 27, 2013
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I believe the T1135 form is a separate submission in all tax software. It is not part of the T1 tax return. Tax software is simply designed to allow one to use it to complete and file the T1135.
One needs to file a T1135 because CRA does not necessarily know all of a taxpayer's foreign assets. CRA wouldn't know if a taxpayer has a foreign domiciled bank account that might pay interest, or a foreign brokerage account, or real property that is rented out.
1:36 pm
April 7, 2021
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AltaRed, thank you for your reply. I reviewed the paper copy of my tax filing and realized that T1135 did not print. I then logged into Studio Tax and confirmed that this form was not included with my submission so I submitted the form. This is something I will not miss the next time.
CRA is aware of all foreign investments I hold with Canadian brokers as the specifics are detailed on the T1135 document. This form would be appropriate to capture assets that are held in entities outside of Canada or are not visible to CRA. I feel that Canadian's with foreign holdings at a Canadian broker are being subjected to unnecessary grief. A few of us probably hold some US or foreign stocks denominated in US funds in a Canadian brokerage account. I do not know anyone with foreign real property or who receives foreign rental income.
At a minimum, I cannot understand why CRA cannot confirm if they have receipt of the T1135 document that I mailed before April 30th. It will be costly for me if they claim they never received the mailed document. I think there should be some sort of exclusion for information CRA already has.
Perhaps I am missing something.
3:52 pm
October 27, 2013
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I agree it would be helpful if CRA MyAccount simply had a line item indicating whether they have a T1135 form on record or not...just as they do with a tax return. I suspect you simply need to assume they have your mailed copy from April on file.
5:30 am
September 30, 2017
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Yes, mikee. StudioTax requires you to file it seperately! The buttion "File and/or print ..." is found on the T1135 form screen.
When you file electronically, you will receive a confirmation number indicating that the Canada Revenue Agency (CRA) has received your form. Keep this number for your records.
8:50 am
April 7, 2021
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hwyc, I contacted StudioTax, something I should have done earlier and they confirm that filing T1135 must be done separately, something I have now done. There is now a limit regarding how much they can charge if they claim they never received my mailed copy.
AltaRed, I will visit my local MP if I am charged. $25.00 / day for late filing for something they already know, for I think most of us does not make sense.
Thank you for your replies. This is a great community.
12:18 pm
April 6, 2013
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CRA doesn't know. That's why one needs to file a T1135 statement.
That foreign holdings or foreign income report from investment dealers is to help clients complete their T1135. The report is not an official tax form and is not sent to CRA.
Scotia iTRADE has this on the last page of one of my reports:
This report has been provided to you as a courtesy service, for informational purposes only and not for official tax purposes. The financial data contained in this report has not been sent or reported to the Canada Revenue Agency and is provided on a reasonable efforts basis using files provided to us by third parties. …
9:32 am
February 16, 2023
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I've used uFile for more than a decade. When I reach the "Netfile" tab it shows very clearly that both forms need to be submitted independently; confirmation numbers for both actions are returned within seconds. I vaguely recall it wasn't always as transparent but full credit to the developers for making it obvious.
10:06 am
April 7, 2021
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Norman1 I did not read the back page of the T1135 statement. Just read it now. I still think the penalty is a bit extreme. Why are these statements not sent to the government. Lesson learned.
8:58 am
April 6, 2013
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I think some brokers, like Scotia iTRADE, incorrectly title the report as a T1135. The report is not a T1135 form. The information in the report is for one's T1135 form.
Yes, the $25 per day failing-to-file penalty for up to 100 days (minimum $100 and maximum $2,500) is hefty. See CRA: Table of penalties for the other penalties that also apply.
There is a balancing between taxpayer privacy and tax enforcement. The T1135 form is only required from taxpayers that have sunk $100,000 or more into specified foreign property. Most taxpayers have not done that. So, there is no need for CRA to receive detailed private info about the foreign shares in most people's brokerage accounts.
9:15 am
October 27, 2013
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Scotia iTrade titles it specifically as 'Foreign Income Verification Report (T1135)'. It doesn't include the words 'tax slip' on Page 1 and T1135 is in parentheses rather than part of the main description. However, I agree that can be confusing and they should say something like (for T1135 reporting) rather than just (T1135).
