Tax filing tip of the day ...
The Canada Revenue Agency is keen to track down potential tax cheats who hide their millions and billions away in foreign tax havens. So they oblige everyone to declare their foreign holdings over $100,000 by filling in form T1135 "Foreign Income Verification Statement" to submit with their tax return. Unfortunately, in the course of testing online tax prep packages I have noticed that the packages are not always clear about a couple of common situations where taxpayers do NOT need to fill in T1135:
1) if those holdings happen to be within a registered account, such as an RRSP, RESP, RRIF, TFSA, LIRA, LRIF, RPP etc; or
2) foreign investments held in Canadian ETFs (e.g. iShares XSP, which holds the S&P 500, but is registered in Canada by iShares Canada and traded on the TSX) or Canadian mutual funds
The instructions and examples on page 2 of the T1135 (available here from the CRA with an FAQ here) make this clear. It makes sense that it would be so as the CRA already is able to collect and control taxes on such accounts.
If you do have over $100k in foreign assets, such as US shares or ETFs in a taxable account, then you must mail in the signed paper copy, even though the rest of the tax info has been NetFile'd online.
Monday, 29 March 2010
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