Reporting for Foreign Property Owned Outside of Canada

Allan Madan, CA
 Mar 2, 2015
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Are you confused about reporting foreign property owned outside of Canada? Reading this blog will give you all the information you need when filing taxes!

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Do you own foreign property out of Canada?
If yes, then you may have additional tax filing requirements in respect for that foreign property owned. Canadians owning foreign property outside of Canada having a total cost of $100,000 or more, must file form T1135 known as the foreign income verification statement.

So, what does the term cost mean for the purposes of completing form T1135?
In simple terms, costs means the amount you paid to purchase an asset. To calculate the total costs for your foreign property, simply add up the individual cost amount for each foreign property that you own. If the sum is equal to $100,000 or more, than you have to file form T1135.

Only certain types of foreign property must be reported. The most common of these is shares in a foreign corporation, land and buildings held outside of Canada and Foreign mutual funds. Certain types of foreign property are excluded from reporting, such as a vacation property or a principle residence outside of Canada. Also excluded are foreign mutual funds held inside a TFSA or RRSP.

Many Canadians own Canadian mutual funds that invest in domestic and international stocks. It would be an absolute compliance nightmare if tax payers had to calculate the portion of their Canadian mutual funds that are invested in foreign shares. So, to make things easier, the CRA has said that Canadian mutual funds do not need to be reported on the T1135.

Fortunately, individuals can file form T1335 electronically with the CRA for the 2014 or later tax years. In previous year, a printed copy of form T1335 had to be physically mailed to the CRA.

When filling out the form, make sure you report the following information for each foreign property that you owned during the year:

  1. Description of the foreign property owned
  2. Income or loss earned in the year form that foreign property
  3. The maximum cost amount of each foreign property during the year and at the end of the year
  4. Capital gains and loses realized on the sale of foreign property

So, Here’s the Tip:

If you own foreign property outside of Canada, remember that you may have to file out form T1135 known as the foreign income verification statement.

If you are planning on preparing your own return this year, please have a look at our 2014 personal tax return checklist for some guidance.  Also make sure to have a look at this article on what 2014 personal tax credits you can claim.

Disclaimer

The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.

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Comments 2

  1. Does form T1335 need to be filed if the properties are held in a U.S. corporation that is owned by a Canadian corporation?

    1. Hi Wendy,

      Form T1134 for foreign affiliates / controlled foreign affiliates should be completed by the Canadian corporation. We can prepare this for you.

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