The Canadian government has made it a priority to “crack down on international tax evasion and aggressive tax avoidance” and has, in doing so, proposed several changes to the Foreign Income Verification Statement (Form T1135). As a bit of a background, Form T1135 must be filed by most Canadian-resident individuals, corporations or trusts that, at any time during a year, owned specified foreign property (including most types of income-earning property held outside of Canada, other than personal property and property used in carrying on an active business) costing in total more than $100,000. Form T1135 must also be filed by partnerships that hold more than $100,000 in foreign investment property and whose non-resident members’ share of income or loss is less than 90% during the reporting period. As we reported in the spring of this year, the changes to Form T1135 proposed in this year’s federal budget include:
- Revising the form by requiring taxpayers to provide more detailed information regarding each specified foreign property.
- Allowing the form to be electronically filed.
- Extending the normal reassessment period of the tax return if certain conditions are met.
- Improving the form filing process by reminding taxpayers, on their Notice of Assessment, of the obligation to file Form T1135, and by clarifying the filing instructions.
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