T1135 Form

Income tax policy, rules, problems, strategy and software. Property and consumption taxes too.
Post Reply
User avatar
MALDI_ToF
Contributor
Contributor
Posts: 515
Joined: 21 Dec 2011 14:08
Location: Vancouver, BC

T1135 Form

Post by MALDI_ToF »

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.
Give a man a fish, and that man knows where to come for fish. Teach a man to fish, and you've just destroyed your market base.
1,1,2,1,3,2,3,1,4,3,5,2,5,3,4,1,5,4,1,5,4,7,3,8,5,7,2,7,5,....
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: 2014 - T1135 Form

Post by kcowan »

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.
For the fun of it...Keith
User avatar
DavidR
Veteran Contributor
Veteran Contributor
Posts: 1937
Joined: 30 Oct 2005 08:33
Location: Toronto

Re: 2014 - T1135 Form

Post by DavidR »

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.
SQRT
Veteran Contributor
Veteran Contributor
Posts: 5441
Joined: 01 Nov 2012 11:33
Location: Ontario/Arizona

Re: 2014 - T1135 Form

Post by SQRT »

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.
epson600
Contributor
Contributor
Posts: 104
Joined: 26 Jan 2008 11:31
Location: ON

Re: 2014 - T1135 Form

Post by epson600 »

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?
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: 2014 - T1135 Form

Post by kcowan »

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.
For the fun of it...Keith
User avatar
MALDI_ToF
Contributor
Contributor
Posts: 515
Joined: 21 Dec 2011 14:08
Location: Vancouver, BC

Re: 2014 - T1135 Form

Post by MALDI_ToF »

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!
Give a man a fish, and that man knows where to come for fish. Teach a man to fish, and you've just destroyed your market base.
1,1,2,1,3,2,3,1,4,3,5,2,5,3,4,1,5,4,1,5,4,7,3,8,5,7,2,7,5,....
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: 2014 - T1135 Form

Post by kcowan »

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...
For the fun of it...Keith
User avatar
deaddog
Veteran Contributor
Veteran Contributor
Posts: 3422
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: 2014 - T1135 Form

Post by deaddog »

Is $US cash held in a Canadian bank considered a specified foreign property?
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
User avatar
DavidR
Veteran Contributor
Veteran Contributor
Posts: 1937
Joined: 30 Oct 2005 08:33
Location: Toronto

Re: 2014 - T1135 Form

Post by DavidR »

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.
User avatar
IdOp
Veteran Contributor
Veteran Contributor
Posts: 3873
Joined: 16 Feb 2006 11:27
Location: On the Pacific sea bed, 100 mi off the CA coast.
Contact:

Re: 2014 - T1135 Form

Post by IdOp »

Even the lumping together seems to be per dealer. In some cases it might be easier just to use Section 2. What a PITA.
User avatar
IdOp
Veteran Contributor
Veteran Contributor
Posts: 3873
Joined: 16 Feb 2006 11:27
Location: On the Pacific sea bed, 100 mi off the CA coast.
Contact:

Re: 2014 - T1135 Form

Post by IdOp »

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.
User avatar
DavidR
Veteran Contributor
Veteran Contributor
Posts: 1937
Joined: 30 Oct 2005 08:33
Location: Toronto

Re: 2014 - T1135 Form

Post by DavidR »

deaddog wrote:Is $US cash held in a Canadian bank considered a specified foreign property?
No.
User avatar
IdOp
Veteran Contributor
Veteran Contributor
Posts: 3873
Joined: 16 Feb 2006 11:27
Location: On the Pacific sea bed, 100 mi off the CA coast.
Contact:

Re: 2014 - T1135 Form

Post by IdOp »

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.
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: 2014 - T1135 Form

Post by AltaRed »

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.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
DenisD
Veteran Contributor
Veteran Contributor
Posts: 4081
Joined: 19 Feb 2005 01:24
Location: Calgary

Re: 2014 - T1135 Form

Post by DenisD »

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.
User avatar
deaddog
Veteran Contributor
Veteran Contributor
Posts: 3422
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: 2014 - T1135 Form

Post by deaddog »

I assume that a couple could have up to 199K in a joint account and not have to file.
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
Spudd
Veteran Contributor
Veteran Contributor
Posts: 1518
Joined: 22 Sep 2013 14:52

Re: 2014 - T1135 Form

Post by Spudd »

So are Canadian-domiciled ETFs that hold foreign stocks (e.g. VUN) now needing to be reported, or not? I find this very confusing.
User avatar
Arby
Veteran Contributor
Veteran Contributor
Posts: 3125
Joined: 20 Feb 2005 19:23
Location: Ottawa, ON

Re: 2014 - T1135 Form

Post by Arby »

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);
User avatar
DavidR
Veteran Contributor
Veteran Contributor
Posts: 1937
Joined: 30 Oct 2005 08:33
Location: Toronto

Re: 2014 - T1135 Form

Post by DavidR »

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
User avatar
Bylo Selhi
Veteran Contributor
Veteran Contributor
Posts: 29493
Joined: 16 Feb 2005 10:36
Location: Waterloo, ON
Contact:

Re: 2014 - T1135 Form

Post by Bylo Selhi »

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.
Sedulously eschew obfuscatory hyperverbosity and prolixity.
Mouly
Contributor
Contributor
Posts: 684
Joined: 16 Aug 2005 00:35
Location: zzz

Re: 2014 - T1135 Form

Post by Mouly »

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?
Liam
Contributor
Contributor
Posts: 81
Joined: 01 Jan 2008 15:28
Location: Ontario

Re: 2014 - T1135 Form

Post by Liam »

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."
User avatar
IdOp
Veteran Contributor
Veteran Contributor
Posts: 3873
Joined: 16 Feb 2006 11:27
Location: On the Pacific sea bed, 100 mi off the CA coast.
Contact:

Re: 2014 - T1135 Form

Post by IdOp »

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.
User avatar
DavidR
Veteran Contributor
Veteran Contributor
Posts: 1937
Joined: 30 Oct 2005 08:33
Location: Toronto

Re: 2014 - T1135 Form

Post by DavidR »

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...
Post Reply