T1135 Form

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MALDI_ToF
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T1135 Form

Post by MALDI_ToF » 06 Feb 2015 03:17

Maybe I have not been getting enough sleep, but this seems to be getting more confusing every year.

Referring to the CRA's Form T1135 - Reporting for 2014 and later tax years they have some changes from last year. The one that caught my eye is the following:
CRA wrote:4. The reporting exception that excludes certain property from the detailed reporting requirement where the taxpayer has received a T3, Statement of Trust Income Allocations and Designations or a T5, Statement of Investment Income from a Canadian issuer is eliminated.
Does this mean I must now report the value of my foreign assets, which is apparently;
CRA wrote:The total value to be reported is the highest fair market value at the end of any month during the year in addition to the fair market value at year end. The aggregate income (loss) earned in the year, and the gain (loss) realized from all dispositions during the tax year must also be reported.
Last year I recall a check box saying that I had foreign assets, but it was held in a Canadian institution that gave me a T slip. It is going to be annoying to find the highest value. At least you only need to look at the end of the months.

While we are at it...is "highest value", taking into account the drop in our Canadian dollar? A sizeable chunk of my US gains were from our dollar dropping so much. In some cases I had more unrealized gains from that than I did from the asset itself increasing in value!

And a third question: Simple Tax has on their T1135 a statement saying you can file this online this year. Studio Tax mentions nothing about filing that statement online or mailing only (as in previous years). CRA says they are working on having it able to be submitted online. Anyone have any more information? I guess the safest is to mail it in.
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Re: 2014 - T1135 Form

Post by kcowan » 06 Feb 2015 07:26

It seems to have gotten clearer than before. Holdings worth more than $100k US in any month that generate income must be reported unless they are reported on T3/T5. I suppose this would include a snowbird property that is rented out, based on its acquired value.
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Re: 2014 - T1135 Form

Post by DavidR » 06 Feb 2015 11:28

kcowan wrote:It seems to have gotten clearer than before. Holdings worth more than $100k US in any month that generate income must be reported unless they are reported on T3/T5. I suppose this would include a snowbird property that is rented out, based on its acquired value.
kcowan, see the What's New section at the following link.
http://www.cra-arc.gc.ca/E/pbg/tf/t1135/README.html
the CRA says " the T3/T5 reporting exception has been eliminated."
Also, please note that the form is required for assets with Cost (not market value) > $100,000 CAD (not US), and it doesn't matter whether they generate income or not...

MALDI_ToF, the online version of T1135 includes two pages of instructions for completing the form. Foreign Currency conversion is discussed there.

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Re: 2014 - T1135 Form

Post by SQRT » 06 Feb 2015 12:11

DavidR wrote:
kcowan wrote:It seems to have gotten clearer than before. Holdings worth more than $100k US in any month that generate income must be reported unless they are reported on T3/T5. I suppose this would include a snowbird property that is rented out, based on its acquired value.
kcowan, see the What's New section at the following link.
http://www.cra-arc.gc.ca/E/pbg/tf/t1135/README.html
the CRA says " the T3/T5 reporting exception has been eliminated."
Also, please note that the form is required for assets with Cost (not market value) > $100,000 CAD (not US), and it doesn't matter whether they generate income or not...

MALDI_ToF, the online version of T1135 includes two pages of instructions for completing the form. Foreign Currency conversion is discussed there.
Personal use property in the US is still excluded. If it is rented out probably needs to be included unless the rent is likely only to recover some costs. The rental thing seems a little vague to me but clearly if you don't rent you are clear.

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Re: 2014 - T1135 Form

Post by epson600 » 06 Feb 2015 12:55

I wonder why they ask for market value of securities held at your "Canadian registered securities dealer" while for everything else they ask about cost basis.

Too bad they got rid of the T3/T5 F-off check-box.
The reporting exception that excludes certain property from the detailed reporting requirement where the taxpayer has received a T3, Statement of Trust Income Allocations and Designations or a T5, Statement of Investment Income from a Canadian issuer is eliminated.
Think it'll be to obvious if the "Maximum fair market value during the year" is the same as "Fair market value at year end" which happens to the market value around Feb/Mar of the next year?

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Re: 2014 - T1135 Form

Post by kcowan » 06 Feb 2015 13:45

epson600 wrote:Too bad they got rid of the.. F-off check-box.
My sentiments exactly. Another make work project for the poor overworked CRA employees.
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Re: 2014 - T1135 Form

Post by MALDI_ToF » 06 Feb 2015 14:45

Well, at least it seems we can lump it together rather than itemize it. I wonder if they will change it again for the 2015 tax year!
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Re: 2014 - T1135 Form

Post by kcowan » 06 Feb 2015 15:46

Based on my look at the work involved in evaluating the maximum portfolio values in C$, I think they will have to take my word for it!

I think it is time to simplify my holdings...
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Re: 2014 - T1135 Form

Post by deaddog » 06 Feb 2015 16:05

Is $US cash held in a Canadian bank considered a specified foreign property?
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Re: 2014 - T1135 Form

Post by DavidR » 06 Feb 2015 16:06

epson600 wrote:I wonder why they ask for market value of securities held at your "Canadian registered securities dealer" while for everything else they ask about cost basis.
CRA is throwing us a bone to make the paperwork easier. Given that many broker statements show market value but not cost (or at least not cost expressed in CAD), it will be much easier for taxpayers to report the market value instead of the cost.

While many of us will know our CAD cost amount at December 31, many will not. It would also be a lot more work for most people to determine the maximum CAD cost value during the year compared to CRA's method, which requires you only to check the market values at each of the 12 month ends and report the highest, converted to CAD.

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Re: 2014 - T1135 Form

Post by IdOp » 06 Feb 2015 16:08

Even the lumping together seems to be per dealer. In some cases it might be easier just to use Section 2. What a PITA.

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Re: 2014 - T1135 Form

Post by IdOp » 06 Feb 2015 16:12

DavidR wrote:While many of us will know our CAD cost amount at December 31, many will not. It would also be a lot more work for most people to determine the maximum CAD cost value during the year compared to CRA's method, which requires you only to check the market values at each of the 12 month ends and report the highest, converted to CAD.
I'm not so sure. The market value is pretty much guaranteed to be different every month, while the cost base will often be the same for long stretches. For someone who trades a lot, the cost base will be a widely varying mess, though.

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Re: 2014 - T1135 Form

Post by DavidR » 06 Feb 2015 16:13

deaddog wrote:Is $US cash held in a Canadian bank considered a specified foreign property?
No.

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Re: 2014 - T1135 Form

Post by IdOp » 06 Feb 2015 16:30

I've forgotten something basic. Does the T1135 apply to investments in a registered account (RRSP, LIRA, TFSA, RRIF, etc.) ? I think the answer is no, but am not sure.

EDIT: Partial answer in the CRA FAQ
Question # 24: RRSP and TFSA are excluded.

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Re: 2014 - T1135 Form

Post by AltaRed » 06 Feb 2015 18:49

I took a quick scan of the two pages of instructions. It seems other than for buy/sell transactions, and the value for year end, the annual average forex rate can be used for market values and income. Thus it is a simple matter of looking at one's monthly statements especially on the USD side of things and pick the month of highest USD market value. At least this is the way it will be for me as I do not have any US domiciled assets on the CAD side of my accounts.
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Re: 2014 - T1135 Form

Post by DenisD » 07 Feb 2015 01:51

Assume, at some point during 2014, I own MSFT with a cost of C$60,000. I buy C$60,000 worth of GOOG and sell all of my MSFT a few minutes later. Do I have to file a T1135? I guess I do. And, if I sell my MSFT first, I guess I don't.

When I refresh my US small-cap screen, I might sell 17 or 18 companies and buy 17 or 18 new ones to replace them. But the buys and sells can be in any order. How do I determine the maximum cost on that day? Do I have to take the time of the trades into account? Or is it based on the net change on the trade date? Luckily, I don't have to worry about it. I'll be over C$100k.

But others, who think they don't have to file, might get caught.

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Re: 2014 - T1135 Form

Post by deaddog » 07 Feb 2015 13:11

I assume that a couple could have up to 199K in a joint account and not have to file.
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Re: 2014 - T1135 Form

Post by Spudd » 09 Feb 2015 11:11

So are Canadian-domiciled ETFs that hold foreign stocks (e.g. VUN) now needing to be reported, or not? I find this very confusing.

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Re: 2014 - T1135 Form

Post by Arby » 09 Feb 2015 11:34

Spudd wrote:So are Canadian-domiciled ETFs that hold foreign stocks (e.g. VUN) now needing to be reported, or not? I find this very confusing.
Canadian-domiciled ETF's are usually structured as trusts, so I think they do not need to be reported, as per the following quote from CRA:
Specified foreign property does not include:

....
an interest in a trust described in paragraph (a) or (b) of the definition of exempt trust in subsection 233.2(1);

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Re: 2014 - T1135 Form

Post by DavidR » 19 Feb 2015 12:57

What's new - Individuals can electronically file Form T1135 for the 2014 tax year. As of February 9, 2015...
http://www.cra-arc.gc.ca/E/pbg/tf/t1135/README.html

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Re: 2014 - T1135 Form

Post by Bylo Selhi » 19 Feb 2015 13:10

But remember that T1135s are different from tax returns. If you don't file a required T1135 by the April 30th deadline you'll face substantial daily penalties even if you owe no taxes. By contrast you can file a tax return at your leisure, even well after April 30th, and if you don't owe CRA any money there will be no late filing penalty.
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Re: 2014 - T1135 Form

Post by Mouly » 22 Feb 2015 18:00

I found this thread after reading this 1135 themed article by Tim Cestnick.

I've never considered or even heard of this form till now. And I was starting to get scared because while the only US assets I own are stocks I certainly have >$100k US over my various investment accounts. Upstream on this thread it seems to say holdings that got a tax slip did not need to be reported. But that exclusion is going away for the 2014 tax year however you only have to report on taxable holdings.

Is that a right nutshell understanding? I only have $US holdings in RRSPs, TFSAs, and RESPs. So I have nothing to worry about?

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Re: 2014 - T1135 Form

Post by Liam » 23 Feb 2015 22:02

Mouly wrote:I only have $US holdings in RRSPs, TFSAs, and RESPs. So I have nothing to worry about?
#25 at http://www.cra-arc.gc.ca/tx/nnrsdnts/cm ... q-eng.html says "Specified foreign property held in an RRSP or a TFSA is excluded from form T1135 reporting requirements."

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Re: 2014 - T1135 Form

Post by IdOp » 23 Feb 2015 23:10

A dismal and sloppy answer to that FAQ by CRA, IMO. The question asks about all registered accounts, with RRSP and TFSA as examples. But the answer only refers to the two examples explicitly. I'd probably read between the lines that it applies to other registered accounts, because they don't list any exceptions. But they really should have given a long list of things it does apply to, and exceptions if there are any. That said, there must be a more definitive source for this.

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Re: 2014 - T1135 Form

Post by DavidR » 24 Feb 2015 10:55

IdOp wrote:A dismal and sloppy answer to that FAQ by CRA, IMO....
Well said! Perhaps someday they'll have a wiki and allow us to suggest fixes... but I'm not counting on it...

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