Canadians are required to report foreign property with a cost of more than $100,000 using Form T1135 Foreign Income Verification Statement. The form is meant to ensure you report any foreign income or property on your Canadian tax return. You can find more information about filing a T1135 Form here.
Starting in 2013, those holding foreign property worth more than $100,000 will be required to provide additional information when it is reported. You will need to state:
- the specific foreign institution or other entity holding your funds outside of Canada
- the specific country in which you own foreign property
- any income generated by the foreign property
The new measures are part of a plan to crack down on Canadians who are not reporting all their foreign income. Even if the income is earned outside of Canada, you are required to report your worldwide income on your personal tax return if you are a resident.
Failure to file a Form T1135 already carries substantial fines, so if you own foreign property worth more than $100,000 make sure you file it by the deadline. And if you have failed to report your foreign holdings, you may want to investigate the Voluntary Disclosure Program. It is better to contact the Canada Revenue Agency first rather than wait for them to find out you own property abroad.
Form T1135 must currently be paper-filed separately from the tax return. However, the CRA is in the process of developing a system whereby it may be filed electronically.