The Canada Revenue Agency (CRA) recently announced in the 2013 budget that it’s tightening foreign reporting requirements. Starting in 2013 and in subsequent tax years, Canadian residents will be required to file Form T1135 with the CRA if they own foreign property. The move appears to align with foreign property requirements in the U.S. Although the finer points of the revision are not clear at this time, it appears Form T1135 will be revised to require taxpayers to offer more detailed information about each specified foreign property, including the name of the foreign institution or other entity that holds funds outside Canada, the specific country to which the property relates, and the foreign income generated from the property.
Budget 2013 also proposes to lengthen the CRA’s reassessment period beyond three years if: 1. The taxpayer has failed to report income from a specified foreign property on their income tax return, and 2. The form was not filed on time by the taxpayer, or a specified foreign property was not identified, or was improperly identified on the form.
The CRA will remind taxpayers of the obligation to file Form T1135 on their Notices of Assessment, if they indicated on their income tax returns that they have specified foreign property in the taxation year with a total cost of more than $100,000. Even if taxpayers don’t make money from their foreign rental property, they should still report it.