T1135 Form

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kcowan
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Re: T1135 Form

Post by kcowan »

No you can safely ignore the form. It is only the first property that qualifies but only if its cost was higher than $100k. The other personal use properties are exempt, even if you sold them for $500k!

Now this also assumes that you are divulging everything that you own in each country.
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Re: 2014 - T1135 Form

Post by milo »

adrian2 wrote: 22 Mar 2015 20:21
rich wrote:When calculating income on foreign securities held with a Canadian securities dealer, the CRA Q and A says to use gross income rather than net income. Would this be construed to mean using income before deduction of witholding tax?
Yes.
Some websites says income is GROSS (part A simplified)
And here is one that says use NET , which is correct? Or are they refering to different fields.

https://profile-en.community.intuit.ca/ ... -on-t1135
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AltaRed
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Re: T1135 Form

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I agree with Adrian. Before withholding tax.
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Re: T1135 Form

Post by scorpionman »

Does anyone know -

If I withdraw cash abroad from my VISA debit card and is automatically converted into the local currency is this considered foreign currency held abroad (literally in my physical wallet or apartment, say I get a vault :)) if I have over $100,000 of Specified Foreign property cost basis in general?

It seems quite tedious to have to declare every ATM withdrawal in a foreign nation on T1135, as well as the maximum amount in the year. Wouldn't this cause a nightmare for travellers?

Also does cash in foreign bank or online wallets accounts used for personal spending fall under the category of personal use property? Or paying a prepaid visa card directly?
Or what if you send money to a relative abroad - or even to yourself via Western Union - and the relative gives you the cash, is this reportable? Seems almost like an ATM withdrawal.

Thanks for any clarification.
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AltaRed
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Re: T1135 Form

Post by AltaRed »

Foreign currency held on your person, and/or is generally located in Canada, is not foreign property. It is no different than USD held in a Canadian domiciled bank acount or a wad of greenbacks sitting in your file cabinet.

Cash held in a foreign domiciled bank account is definitely foreign property though. I declare the value of my Wells Fargo bank account on my T1135 each year even though the funds are intended to cover personal purchases I make to my Wells Fargo CC. The amount (5 digits) is enough to warrant disclosure.

Interesting question on pre-loaded credit cards and prepaid visa cards. Don't know the answer, but if I did use such cards, I would NOT declare the monetary position on those cards either, and especially not if they are Canadian domiciled cards. The amount is presumably temporary and any balance that remains follows me home.
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Re: T1135 Form

Post by scorpionman »

I just read the latest instructions on T1135 and lo and behold they have added foreign pre-paid debit and credit cards as reportable!

However I'm not sure how to interpret foreign cash held on your person while abroad. This is technically foreign currency. And could be substantial. If you withdraw it from a Canadian debit card (which is not reportable) does it suddenly become reportable when the ATM spits out your cash in Brazil?

Canadian financial institutions have a real lack of foreign products - few forex cards, fee-free or no forex atm withdrawals, payments to foreign persons (e.g for rent), thus making it kind of necessary to use foreign e-wallets or accounts when living abroad but still resident in Canada.
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Re: T1135 Form

Post by AltaRed »

There mere act of me having USD in my pocket whether I am in Vancouver or Amsterdam can't possibly make a difference.

I can see pre-paid balanceson a foreign debit/credit card being foreign currency, but again I can't imagine CRA worrying about travellers with foreign cash on them in a foreign country.
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Re: T1135 Form

Post by KFried »

Thru inheritance, in 2017 my foreign holdings became:

130k - bank accounts+one apartment 85k+second apartment 30 k

1. What do I declare for 2017 ?
2. I will re(?)-patriate the cash in the banks to Canada in 2017; that will leave me with the apartments(not rented, mothballed). What will I have to declare for 2018 ?

Thank you
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Re: T1135 Form

Post by AltaRed »

Two links:

https://turbotax.intuit.ca/tips/declari ... eturn-6217

http://www.advisor.ca/tax/tax-news/unde ... 135-151683

For 2017: cost = bank account (date of value in CAD equivalent on the date you took ownership), both apartments (ACB in CAD equivalent on the date you took ownership). Max value = may be a later date than above IF the loonie depreciated during the year and/or value of the bank account (including interest) and apartment market values increased)

For 2018: Apartments only. Cost = ACB from above. Max value may be a higher number if loonie depreciated and/or market value increased.

RE is only excluded if it is a vacation property. Neither of the apartments qualify based on what you have said
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Re: T1135 Form

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AltaRed wrote: 14 Oct 2017 13:06
For 2018: Apartments only. Cost = ACB from above. Max value may be a higher number if loonie depreciated and/or market value increased.

RE is only excluded if it is a vacation property. Neither of the apartments qualify based on what you have said
I consider the 85k apartment as my pied-a-terre in the old country - It waits for me and my family's use day and night ( all utilities on, fiber-to-the-home connection, etc). Same is true for the second apartment (minus internet)

From http://taxca.com/blog-2016-18/

“Personal use property” generally includes property that is used primarily for the personal use and enjoyment of the owner or certain related persons.

“Primarily” generally is equivalent to “more than 50%”. Thus if a Canadian owns a condo in Florida that is used more than 50% by him or his family, it should be excluded from T1135 reporting. However, if it is held mainly to rent to unrelated parties, it is not excluded.

So, what do you think ? Should I still have to report in 2018 ?

AltaRed, thanks again for the the quick/detailed reply and your dedication to the forum
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AltaRed
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Re: T1135 Form

Post by AltaRed »

You originally said the apartments were 'not rented, mothballed'. That is different than an apartment that has off and on occupancy, furnished with connected utilities ready-for-use for your family. Which is it?

I doubt you can assume both apartments are vacation properties being enjoyed from time to time by family. That might be stretching it. Do you want a dispute with CRA?

If you can justify the more expensive property as a true vacation property and can produce evidence of intermittent use annually IF CRA asks for it, then I'd consider that a safe assumption. In which case in 2018, you do not exceed $100kCAD in 2018 and you do not need to submit the T1135 for the 2018 tax year.

If not, look at it this way. The penalties for NOT reporting foreign property with an aggregate value of over $100k CAD equivalent are severe. The T1135 is not difficult to fill out. Ultimately if you sell one or both properties, you will have a reportable cap gain to pay tax on. That is the point of the T1135. To catch income on foreign property a taxpayer just might 'forget' to include on a tax return.
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Re: T1135 Form

Post by bentpiston »

I have always reported and paid all the taxes on my foreign income. But honestly, I only recently learned about the T1135. I am middle-class guy. I have no fancy accountants. I had always understood the question about $100K in foreign property to mean real estate property. I did not realize that my Vanguard mutual funds in taxable account counted as well. I wonder how many people are making the same mistake.

In my case, the combined ACB in CAD for all my vanguard mutual funds (only taxable account) is over $250K. How do I report this to the CRA? I assume I have to report under Part B and Category 1 (i.e., Funds held outside Canada). Do I need to breakdown each individual holding (i.e., mutual fund) or can I just report the aggregate for the whole account?

I am considering filing a voluntary disclosure with the CRA. I have been told that I would have to file T1135's for the last three years with my VDP. I live in QC. Do I need to file a separate VDP with Revenu QC? I could not find a form equivalent to the T1135 in the Revenu QC website.
Last edited by bentpiston on 15 Oct 2017 17:00, edited 2 times in total.
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Re: T1135 Form

Post by KFried »

To me, utilities on but empty, curtains drawn, equals "mothballed".

CRA's own aid page on T1135 mentions a Florida condo rented 40% of the year as an example of "personal use", thus non-reportable. By comparison, my empty apartments qualify even more.
The candid truth is that I'm keeping the apartments also for their sentimental value, beyond usefulness, while still marking territory where I grew up. Can I not keep a bachelor pad and a mausoleum as personal use to my vanity ? If there is a limit on the number of "personal use" items allowed I did not
see one on CRA's foreign real estate aid.

Also, the burden of opposite proof should be with CRA (let them, there's none).

And, excuse the neophyte: I pay property tax at origin, I will pay taxes when selling at origin. What claim should Canada have on my inheritance business abroad, what's the spirit of this levy ?

Thanks an pardon the rhetoric
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AltaRed
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Re: T1135 Form

Post by AltaRed »

As I suggested, you can argue one of the apartments is personal use, but IMO, probably not both. However, if you use the more expensive one as personal use for 2017 (and beyond) and re-patriate your cash in 2017, the least expensive apartment puts you below the threshold anyway for 2018.

FWIW, CRA doesn't care about your feelings. You can tangle with them as you decide to do so. When they disallow something on your tax return, the burden of proof falls to you to prove otherwise. I would operate on the 'safe' side when it comes to the cookie monster.

Added: Whether you declare personal use or not for either or both, both will be subject to cap gains taxation when you sell them. That is just the way it works even for stocks. You have an ACB = Fair Market Value on the date of inheritance and you pay CG taxes if that stock increases in value by the time you sell it. Totally fair.
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Re: T1135 Form

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My interpretation of "personal use" according to CRA's aid is that it's opposed to an income-generating vehicle. If I, the owner, am not renting out, whose use is it ? There's no room for arguing here, IMO, CRA or not.

Again, is there a limit on the number of personal use properties one can own ? Did not see a mention of that anywhere ... Did not see the term "vacation" anywhere either.

Will consult a tax pro, share the view on the matter.

Thank you for the POV
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Re: T1135 Form

Post by AltaRed »

Yeppers, I would like to know a professional's view as well. From my perspective, CRA wants to know about ex-Canada domiciled assets that generate, or are likely to, generate income that is reportable. I suppose, on that basis, one could have multiple personal use properties.
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Re: T1135 Form

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bentpiston wrote: 15 Oct 2017 09:30 I am considering filing a voluntary disclosure with the CRA. I have been told that I would have to file T1135's for the last three years with my VDP. I live in QC. Do I need to file a separate VDP with Revenu QC? I could not find a form equivalent to the T1135 in the Revenu QC website.
Does anyone have any experience fixing past T1135s? I have already paid all the taxes owed. I just want to file the forms, which I did not know were required. I have started looking into the VDP program but the language surrounding it is sort of scary. It seems like they are trying to catch high-rollers with huge offshore accounts. I am not really sure if it is meant for someone like me who does not owe any taxes but was not aware of the forms.
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Re: T1135 Form

Post by SoninlawofGus »

bentpiston wrote: 16 Oct 2017 04:06 Does anyone have any experience fixing past T1135s? I have already paid all the taxes owed. I just want to file the forms, which I did not know were required. I have started looking into the VDP program but the language surrounding it is sort of scary. It seems like they are trying to catch high-rollers with huge offshore accounts. I am not really sure if it is meant for someone like me who does not owe any taxes but was not aware of the forms.
I think what you're talking about is referred to (at least by the IRS) as "quiet disclosure." There is probably no correct answer here: if you go the non-VDP route, you take your chances that they will ignore you as a minnow. That, of course, would likely depend on the level of infraction (holding $105,000 vs. $500,000) and/or the number of years you were not in compliance.
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Re: T1135 Form

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bentpiston wrote: 16 Oct 2017 04:06
bentpiston wrote: 15 Oct 2017 09:30 I am considering filing a voluntary disclosure with the CRA. I have been told that I would have to file T1135's for the last three years with my VDP. I live in QC. Do I need to file a separate VDP with Revenu QC? I could not find a form equivalent to the T1135 in the Revenu QC website.
Does anyone have any experience fixing past T1135s? I have already paid all the taxes owed. I just want to file the forms, which I did not know were required. I have started looking into the VDP program but the language surrounding it is sort of scary. It seems like they are trying to catch high-rollers with huge offshore accounts. I am not really sure if it is meant for someone like me who does not owe any taxes but was not aware of the forms.
See this post and this post about one posters experience with CRA penalties for late filing of T1135. The posts were from 2010, so maybe CRA has changed their procedures since then.
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Re: T1135 Form

Post by AltaRed »

A professional may have to advise vis-a-vis the VDP process when it comes to failure to file T1135. The thing is that it appears that failure to file is not limited in time by statute. http://taxca.com/blog-2016-44/

It also appears CRA takes (or has taken) a hard line in this matter. http://www.canadiantaxlitigation.com/tag/t1135

But there is supposed relief under the VDP https://taxpage.com/articles-and-tips/v ... ot-filing/ But don't know that ignorance plays well, and 'relief' is often granted for specific reasons, one of them being 'financial hardship'...whatever that really means.

The key likely is to file the forms under the VDP process, per quote from this dated article http://www.advisor.ca/tax/tax-news/taxp ... ance-77515
This is a major victory and suggests some sympathy may be available through the court system. In cases of late-filed T1135s, your client should submit them under the CRA’s Voluntary Disclosure system to avoid penalties.
The T1135 form has been around for about 20 years I believe and as long as I can remember, the question about owning $100k in CAD equivalent of foreign assets has been asked in every T1 General. IMO, it is hard to argue about 'not knowing' to file this form. Tax software flags this requirement when preparing T1 Returns.

Bottom line: Spend some money talking to a tax professional, perhaps a tax lawyer in this case.
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Re: T1135 Form

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An FYI, Scotia iTrade, for the first time, is providing information for the T1135.
‘Cost during the year’, ‘Max cost during the year’, ‘Max fair Market Value during the year’ have been calculated using the applicable monthly average exchange rate for the reporting period listed in
the report. ‘Gross Income’ amounts have been calculated using either the date of payment rate or the monthly average exchange rate for the twelve months during the reporting period, as available. ‘Year End Market Value’, ‘Realized Gain/Loss’, and ‘Year End Cost’ amounts have been calculated using the exchange rate at end of the reporting period.

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. This report should not be construed to constitute or imply tax advice. You should consult with your tax or other professional advisor prior to using any data referenced herein for tax or any other purposes.
This is probably a good thing, especially for those struggling with inputs for the form, and as a validation check against one's own calculations. The only thing I object too in their assumptions is using
‘Gross Income’ amounts have been calculated using either the date of payment rate or the monthly average exchange rate for the twelve months during the reporting period, as available.
where I believe one can/should avail themselves of the annual average exchange rate for recurring income as allowed by CRA. I suppose iTrade's methodology is more accurate but think I will stick to my longstanding 'annual average' for this calcuation.
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Re: T1135 Form

Post by Peculiar_Investor »

AltaRed wrote: 12 Feb 2018 14:22 An FYI, Scotia iTrade, for the first time, is providing information for the T1135.
‘Cost during the year’, ‘Max cost during the year’, ‘Max fair Market Value during the year’ have been calculated using the applicable monthly average exchange rate for the reporting period listed in
the report. ‘Gross Income’ amounts have been calculated using either the date of payment rate or the monthly average exchange rate for the twelve months during the reporting period, as available. ‘Year End Market Value’, ‘Realized Gain/Loss’, and ‘Year End Cost’ amounts have been calculated using the exchange rate at end of the reporting period.

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. This report should not be construed to constitute or imply tax advice. You should consult with your tax or other professional advisor prior to using any data referenced herein for tax or any other purposes.
I was ready to give kudos to iTrade for making this information available until I reached the damn CYA second paragraph. :twisted: :twisted: I detest this now seemingly standard practice of financial institutions and others of providing the numbers and them refusing to fully stand behind them. If you cannot commit to the numbers, then why provide them?
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AltaRed
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Re: T1135 Form

Post by AltaRed »

In fairness, they are also providing the cost base for the year. That is great IF they have the correct Maximum and End of Year Cost (ACB) values for the individual assets. That may do for the majority of investors who do not know what they are doing otherwise, and because for most, it is of potential consequence only if an individual is near/at the $100k or $250k threshold, but the cost values would be incorrect if that asset is also owned in another brokerage non-reg account.
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Re: T1135 Form

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The only reason for the t1135 is to collect departure tax or capital gains on foreign assets.
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Re: T1135 Form

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scorpionman wrote: 12 Feb 2018 16:04 The only reason for the t1135 is to collect departure tax or capital gains on foreign assets.
:?: It is to disclose ownership of ex-Canada assets so that CRA can tax foreign income accordingly on an annual basis, and yes, capital gains on sale of foreign assets too.

Departure tax applies to all unrealized capital gains (in non-reg accounts), deemed or otherwise, domestic and foreign.
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