Canada
Foreign property
The Canadian tax form for individuals asks if you own foreign property with a total cost of over $100,000 Canadian at any point in the year. If so, a separate form (T1135) must be filled in.
By cost, revised fair market value of securities etc. can be ignored. As well, cottages used for personal use can be ignored. Of course, this case becomes grey if you decide to rent out your secondary home for any significant time period. Further details (what is counted and what is not) are described later in this article and/or can be obtained from the Revenue Canada web site.
While being late with a tax return is never a good thing, being late in filing this form is especially onerous. Penalties in the thousands of dollars will be assessed by Revenue Canada.
What does foreign property include?
Foreign property: anything for which you are legally the owner.
While this description may appear obvious, there are cases which may be less obvious. For instance, public US companies may pay their Canadian directors, vp(s) etc. in equity as an incentive. More specifically, Canadians may be allocated equity at the beginning of a period without becoming the owner of the equity until is is fully vested. The equity, typically, will vests at certain specific dates. Depending on those dates, you may be crossing (or not) the $100,000 threshold. Of course, if your portfolio consists primarily of US securities, you may have crossed the $100,000 threshold anyway, possibly rendering this is a mute point. For any similar/less obvious cases which are somewhat grey, please consult your tax advisor. There are also additional rules (primarily information requirements) when crossing the $250,000 threshold.
Overall though, there are very obvious items that go (or not) on the list.
What contributes to the $100,000 of foreign property threshold (examples)?
Foreign securities
US based mutual funds
US bank accounts
Shares of a foreign (non-resident) corporation whether held through a broker, or not
Shares held through a foreign agent, even if the ultimate company is Canadian
US insurance policies
Investment land, even if not generating revenue
Multi unit dwellings (foreign) where you reside (even full-time), in one of the many units
What does not contribute to the $100,000 foreign property threshold?
Personal use property:
-Vacation property (used at least 50% if the time for personal or enjoyment purposes). Rental amounts collected from friends etc. which are used to cover expenses (as opposed to making a profit) would be fine in the eyes of Revenue Canada and not change the personal use property status. Note: Please speak to your tax accountant for any grey areas not covered by these examples.
-Collectibles including coins, stamps, rare books, art, jewelry etc.
-Canadian securities even if the trading currency is a foreign currency. For instance, some Canadian companies may trade in US dollars.
Important details:
The $100,000 threshold is based on cost or cost base, not fair market value
The $100,000 represents the additions of the various foreign assets, no matter how different
Inheritances, gifts etc. value are based on fair market value at the time of the gift, inheritance etc.
As alluded to previously, the $100,000 threshold just has to be crossed for one day in the year in order to have to report foreign holdings on the T1135.
Partnerships have specific rules. Generally, the partnership is also responsible for filing the T1135 if it owns foreign assets in excess of $100,000 (not the specific partners).
For reporting purposes, Revenue Canada will split the foreign assets out by country.
If foreign assets exceed $250,000, additional detail (as opposed to the simplified method of reporting between $100,000 and $250,000) is required.
Reference document from Revenue Canada:
T1135
Documents to keep in Beasley:
1-Document provided from your financial institution of foreign securities etc.
2-Any other documentation related to your ownership of foreign assets
