T1135 FOREIGN INCOME VERIFICATION

Form T1135, Foreign Income Verification Statement, must be filed by Canadian residents who held specified foreign property with a total cost of more than $100,000 (Canadian) at any time in the year. It is an information return; it does not by itself create tax, but penalties for not filing are significant.

SPECIFIED FOREIGN PROPERTY

• Funds held in foreign bank accounts.

• Shares of foreign corporations (including US shares held in a Canadian brokerage account).

• Interests in foreign mutual funds and trusts.

• Debts owed by non-residents.

• Foreign rental property or other real property held for investment.

EXCLUDED PROPERTY

• Property used exclusively in an active business.

• Personal-use property, such as a vacation home used mainly by the family.

• Property held in RRSPs, RRIFs, TFSAs and other registered plans.

• Shares of foreign affiliates (reported on Form T1134 instead).

• Canadian-listed ETFs and mutual funds that invest in foreign securities.

REPORTING METHODS

• Simplified method: if total cost was more than $100,000 but less than $250,000 throughout the year, report by category of property and country.

• Detailed method: if total cost reached $250,000 or more, report each property, with maximum cost during the year, cost at year end, income and gain or loss.

PENALTIES

$25 per day, up to $2,500, for late filing; larger penalties for knowingly failing to file; and an extended three-year reassessment period for the related income.