Possible Updates!! Note that this was written in July of 2019. You should use this as a guide but make sure to work with the current rules (they have likely changed).
This is the third post in my series of posts about Canada’s Foreign Asset reporting requirements. The first post described the range of Foreign Asset reporting requirements. The second post discussed the conditions which trigger the requirement to file Form T1135. This third post focuses on how to complete and file Form T1135.
For many individuals, the threshold question of WHETHER you are required to file Form T1135 will be more difficult than HOW to file Form T1135.
This post ASSUMES that you have met the reporting threshold and focuses on:
1. A review of whether Form T1135 is required
2. What information is required to be reported on the T1135
3. How to complete Form T1135
4. Where/how to file Form T1135
Form T1135 is available on the Canada Revenue Agency site here.
I have also uploaded the form.
You should print the form and have it available while you read this post. Form T1135 has broken the different categories of assets into seven different categories of foreign property.
Here we go …
The purpose of this post …
This is the second of my posts about Canada’s foreign asset reporting requirements. The first post introduced Canada’s Foreign Asset Reporting Requirements. This post will focus specificlly on Form T1135 as it applies to individuals. Individuals are disadvantaged because they may or may not use professional tax advisers. Form T1135 is a “compliance trap” and can lead to serious penalties for inadvertent noncompliance. (The case of Takenaka v AGC, 2018 FC 347 will be of great interest to U.S. citizens moving to Canada who retain their home in the United States. Ditto for certain U.S. life insurance policies.)
This post is for the purpose of helping individuals understand Form T1135 and the reporting obligations it implies. Obviously this is general discussion and not advice specific to your situation. Form T1135 reporting requirements are surprisingly complex. The Canada Revenue Agency is surprisingly unforgiving for “foot faults” in relation to this form.
Part A: Parsing the language – what is the basic Form T1135 reporting requirement?
If you want to understand the law it’s a good idea to begin with reading the law (make a note of that point). In this case the text of the law is found in Section 233.3 of the Income Tax Act of Canada (a not particularly obscure statute).
This post will guide you through the statute. Please note that all words in italics (whether bolded or not) are my personal commentary/explanation.