Do you have to file this form

All Canadian resident taxpayers (including non-resident trusts deemed

resident in Canada by section 94 of the Act) are required to file the Form T1135, Foreign Income Verification Statement if at any time in the year the total cost amount of all specified foreign property to the taxpayer was more than $100,000 (Canadian).

An individual (other than a trust) does not have to file Form T1135 for the year in which the individual first becomes a resident of Canada (section 233.7 of the Act). 

How to complete this form 

If the total cost of all specified foreign property held at any time during the year exceeds $100,000 but was less than $250,000, the form has been designed to provide you with the option of completing either Part A or Part B. 

Due dates for filing this form

Form T1135 must be filed on or before the due date of your income tax return

or, in the case of a partnership, the due date of the partnership information

return, even if the income tax return (or partnership information return) is not

required to be filed.

Penalties - Failing to file

The penalty for failing to file a return is $25 per day for up to 100 days (minimum $100 and maximum $2,500). When failing to file is done knowingly or under circumstances amounting to gross negligence, the penalty is $500 per month for up to 24 months (maximum $12,000), less any penalties already levied. This penalty does not apply to Form T1142. After 24 months, the penalty is 5% of whichever of the following resulted in the requirement to file the information return, less any penalties mentioned above already levied. 

• the cost of the foreign property
• the fair market value of the property transferred or loaned to the trust
• the cost of the shares and indebtedness of the foreign affiliate

The CRA may issue a demand to file a return to a person or partnership under subsection 233(1) of the Income Tax Act. If so, and if the person or partnership knowingly or under circumstances amounting to gross negligence fails to comply with the demand, the penalty is $1,000 per month for up to 24 months (maximum $24,000), less any penalties already levied.

Penalties - False statements or omissions
A penalty applies to people who knowingly or under circumstances amounting to gross negligence make false statements or omissions in an information return.

The penalty is the greater of either:

• $24,000 or
• 5% of whichever of the following the false statement or omission was made about:

1. the cost of the foreign property
2. the fair market value of the property transferred or loaned to the trust or
3. the cost of the shares and indebtedness of the foreign affiliate

US & Canada Tax - Lily Lo CPA Professional Corporation - Edmonton, Alberta