Specified Foreign Property – What is that?

If you are a Canadian resident, you are required to declare your income from all sources, both Canadian and foreign. If the total cost of specified foreign property exceeds $100,000 (CDN) at any time during a taxation year, you have to report the information on Form T1135. This form must be filed by the due date for filing your income tax return for the particular year.

Specified foreign property is:

  • funds and bank accounts held outside Canada;
  • tangible and intangible properties located outside of Canada;
  • shares and debt of foreign corporations (even if held with a Canadian broker);
  • shares of Canadian corporations held outside of Canada (even if held with a foreign broker);
  • an interest in a partnership that holds a specified foreign property unless the partnership is required to file Form T1135;
  • a debt owed by a non-resident, including government and corporate bonds, debentures, mortgages, and notes receivable;
  • an interest in a foreign insurance policy;
  • Land and buildings located outside of Canada;
  • precious metals, gold certificates, and futures contracts held outside Canada

Canadian public corporations whose shares are trading on foreign stock exchanges are not considered specified foreign property.

Specified foreign property does not include:

  • Foreign investments held in Canadian-registered mutual funds;
  • a property used or held exclusively in carrying on an active business;
  • foreign investments held in Canadian-registered mutual funds;
  • Foreign property held for personal use and enjoyment, such as a vehicle, vacation property, artwork, etc.;
  • a share of the capital stock or indebtedness of a foreign affiliate;
  • Foreign property held for personal use and enjoyment, such as a vehicle, vacation property, artwork, etc.;
  • Foreign property held within registered plans like RRSPs, LIFs, RRIFs, LIRAs, TFSAs, RESPs and RDSPs;
  • Assets held in a foreign registered pension account (IRA, 401K);
  • Shares of a foreign affiliate

Filing Deadline
Form T1135 is due on the same date as the income tax return, both corporate or personal.

Penalties
For the list of penalties that apply to non-reporting of foreign income, click HERE

When In Doubt! 
Report your foreign property and file Form T1135 anyway!  There are no penalties for filing it even if it is not required.

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