Foreign Property? New CRA Form Required in 2013
Income from both domestic and foreign sources must reported on the Canadian tax return by residents of Canada. Starting with the 2013 taxation year, the CRA will require Canadians holding foreign property with a cost of over $100,000 to file out a new, enhanced Foreign Income Verification Statement (Form T1135).
Taxpayers and their advisors should prepare now to receive and report the following information about the property on the 2013 return:
· the name of the specific foreign institution or other entity holding funds outside Canada;
· the specific country to which the foreign property relates; and
· the income generated from the foreign property.
The last federal budget (March 21, 2013) also extended the reassessment period from three to six years to audit taxpayers to ensure income from a foreign property was a reported on their income tax return. If the Foreign Income Verification Statement (Form T1135) was not filed, late-filed, or included incorrect or incomplete information concerning a foreign property, penalties could result.
Delinquent taxpayers should be encouraged to voluntarily comply by seeing their tax professionals now.