If you owned foreign investments whose total cost exceeded $100,000 at any point in 2014, don't forget to file the newly updated Form T1135 "Foreign Income Verification Statement" when you prepare your tax return this season.
Foreign property that's reportable will include the obvious things like money in a Florida bank account or an Arizona rental property, but also includes foreign stocks, like Apple or Google, which are held in your Canadian, non-registered brokerage account. It excludes foreign securities held in Canadian mutual funds or inside a registered account like an RRSP, RRIF, TFSA or RESP.
The form is due on April 30, the normal filing date for most taxpayers, but can be filed as late as June 15 if you or your spouse or partner were self-employed in 2014. Penalties for late-filing Form T1135 are severe: $25 for each day beyond the deadline, up to a maximum of $2,500, plus interest.
On the form, you are asked to report the types of foreign investments you owned in 2014 and their maximum cost amount during the year. You also must report their fair market value at the end of the year, along with the country in which those assets are located. Taxpayers are also asked about the income (loss) from those investments along with any gains (or losses) from the disposition of those assets in 2014.
New for 2014 is simplified aggregate reporting which applies if your foreign securities are held in an account with a Canadian registered security dealer or Canadian trust company.
If so, you simply need to fill out Section 7 at the bottom of the form, in which you report the name of your broker/trust company at which the securities are held and then you indicate, on a country by country basis, the total maximum fair market value of your foreign securities during the year as well as the fair market value at year end, along with any income, gains (or losses) from those investments.
This replaces the need to track down and report the highest cost amount of each foreign security you owned in 2014, which could be quite an onerous and time consuming process.
Also new this tax filing season is the ability to transmit the form electronically, using either EFILE (if prepared by a tax professional) or NETFILE, if you prepared your own return using tax preparation software certified by the CRA. Note that corporations, trusts and partnerships are still required to file a paper copy of this form.
While the 2014 T1135 may be simpler than in other years, it still seems unnecessary to require taxpayers to report on the T1135 anything held in a Canadian brokerage account to begin with.
After all, the CRA is already receiving detailed information on income and gains on all property (Canadian and foreign) held in these accounts through the traditional T3, T5 and T5008 reporting.