Interest on Fixed Deposit in Inda

Question

2318 viewsMarch 23, 2018Personal Tax

0

Melwyn D'Silva (anonymous) Posted March 20, 2018

I was working in the middle east and came to Canada in 2006. I had accumulated some funds in India and invested in a Fixed Deposit in India in 2012 the equivalent of CAD 200,000 which would mature in 2022. The maturity amount would be approx. twice the initial deposit. This amount was never disclosed on my tax returns on form T1135. On account of the new sharing of information regulations in place between the two countries I, in January of 2018 broke this deposit and redistributed the initial deposit plus accrued interest of approx. CAD 100,000 between my three adult children and wife in equal proportion.

Can you please let me know the tax implications of:
1. not disclosing the initial investment in T1135
2. will the CRA question me regarding the source of the initial deposit
3. the tax implications of distribution of the deposit and the interest received

1 Answer

score 0 · Answer 1 · 2018-03-23T15:28:28+00:00

Hi Melwyn, thank you for your question. You are supposed to report the interest earned each year on your Canadian tax return and pay Canadian income taxes on the interest earned. In addition, foreign assets having a cost amount of more than $100,000 at anytime in the year must be reported on form T1135, Foreign Income Verification Statement.

I recommend that you submit an application under the Voluntary Disclosure Program in respect of your fixed deposits in order to avoid penalties for failure to report income and for failure to disclose foreign assets. These penalties can be large.

Interest on Fixed Deposit in Inda

1 Answer

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