Services to Individuals
Declaring Foreign Properties (T1135)
Is the CRA just being flatout nosy?
Many new immigrants who still withhold foreign properties didn’t know that they have reporting obligations to the CRA. Given how these properties have already been taxed by governments of their respective regions, such obligation does seem counterintuitive: The real-estate property tens and thousands of miles away from the Canadian territories, acquired by the money made by the means of that foreign country, should hold no tax obligations to Canada by any sound logic. However, the CRA does not intend to tax you on those properties you hold overseas. Only if these properties generate income would you be taxed accordingly. In other words, the CRA needs to know if you have the means to produce foreign incomes.
Of course, you may hold foreign properties under your name for your parents’ retirement that generate no income. You won’t be taxed in that case, but you do need to inform the CRA of the properties by filing Form T1135.
Failure to comply could result in rejection of foreign payments to you. For example, after the foreign property is sold, and the sum of sales is to be wired to you in Canada, the Canadian government – in efforts to reduce the risk of money laundry and fraud – may reject the money it deems as from an unclear source. Needless to say, the only way for you to clarify the source is by reporting them beforehand.
Do I need to report all my foreign properties?
No, only the ones whose total costs exceed CAD 100,000.
What’s on Form T1135?
T1135 consists of both Part A and Part B.
Part A: This part of the form offers a simplified reporting method. You can apply to this method if the total cost of all your foreign properties is more than CAD 100,000 but less than CAD 250,000. By opting for the simplified method, you will only need to tick off the box for each type of the property you own without providing excruciating details.
Part B: This part of the form offers a detailed reporting method that you must use if the cost of the foreign property you hold exceeds CAD 250,000.
What’s on Form T1135?
The CRA surmised that failures to meet tax obligations are unintentional, and all first-time offenders deserve second chances. To correct the tax return you previously filed or didn’t file, you can opt for the Voluntary Disclosure Program (VDP). Once your application is accepted by the CRA, you will not be charged any penalty; however, you remain liable for the interests accrued to the owing amount if any.
For more information, please refer to our service for Voluntary Disclosure Program.