T1135, Foreign Income Verification Statement

The answer to the question Did the corporation own specified foreign property in the year with a cost amount over $100,000 (Canadian)? will be “Yes”:

• the total of the amounts in the Maximum funds held during the year, Maximum cost amount during the year and Maximum fair market value during the year columns of the “Categories of Specified Foreign Property” section is more than $100,000; or
• if the check box Your firm has not been engaged to file Form T1135., is selected; or
• if the check box Form T1135 will be transmitted or paper-filed at a later date., is selected; or
• if you have selected one of the following boxes:
  • if the total cost of all specified foreign property held at any time during the year exceeds $100,000 but was less than $250,000, you are required to complete either Part A or Part B;
    or
  • if the total cost of all specified foreign property held at any time during the year was $250,000 or more, you are required to complete Part B.

The T1135 will be applicable:

• if the answer to the question Did the corporation own specified foreign property in the year with a cost amount over $100,000 (Canadian)? is “Yes”;
• the check box Your firm has not been engaged to file Form T1135. is not selected; and
• the check box Form T1135 will be transmitted or paper-filed at a later date. is not selected;
  or
• the check box If this is an amended return check this box. is selected

The electronic filing date displays automatically if the form has been selected for electronic filing. Otherwise, the “Paper-filed date” field will remain an input field.

Preparer Profiles

Options relating to the printing of the paragraph indicating that according to the information supplied, the corporation was not required to file Form T1135

If Form T1135 is not applicable and the check box Include the paragraph indicating that according to the information supplied, the corporation was not required to file Form T1135 is selected at point 1 of the CLIENT LETTER tab in the chosen preparer profile, this paragraph will be included in the Client letter, Filing Instructions (Jump Code: CLF) for all your client files.

You may also choose, for a given client file, not to include the paragraph indicating that according to the information supplied, the corporation was not required to file Form T1135, by clearing the check box Include the paragraph indicating that according to the information supplied, the corporation was not required to file Form T1135 in the “T1135” section of the Client Letter Worksheet (Jump Code: LW).

Transfer from the ACB form into the T1135 form*

A transfer of data from the ACB form into the T1135 form can be made when property held entered in the ACB form is specified foreign property that is part of the following classes:

• Shares ;
• Real estate ;
• Bonds;
• Other properties .

In order for the program to transfer the data, answer the question Do you want to transfer data to Form T1135? If applicable, select the section of the Form T1135 into which this property should be transferred. Note that the data relating to property in category 7 held in an account with a Canadian registered securities dealer or a trust corporation cannot be transferred to Form T1135, because you must provide the cumulative totals per country for each account. Therefore, data with regards to property must be entered manually.

Based on the section of Form T1135 selected for the transfer, the data transferred to Form T1135 is the description, country code, maximum funds held during the year/maximum cost amount during the year/ and funds held at year-end/cost amount at year-end.

If the property is part of the Real estate, depreciable property, and other properties class in the ACB form and the box This is a depreciable property is selected, only the description and the country code are transferred to Form T1135.

If the data relating to the property is also transferred to Schedule 6, the program transfers the income (loss)/gain (loss) on disposition, as applicable.

* Note that no data is transferred if Part A, “Simplified reporting method,” has been completed in Form T1135.

Transfer from Schedule 6 into Form T1135*

A transfer of data from Schedule 6 into Form T1135 can be made when the property subject of a disposition is specified foreign property that is part of the following classes:

• Shares;
• Real estate;
• Bonds;
• Other properties.

In order for the program to transfer the data, select the following box:

Then, in the Transfer to T1135 list, select the section of Form T1135 into which the income should be transferred. Note that the data relating to property in category 7 held in an account with a Canadian registered securities dealer or a trust corporation cannot be transferred to Form T1135, because you must provide the cumulative totals per country for each account. Therefore, data with regards to property must be entered manually.

The data transferred is the description, country code and the income (loss)/gain (loss) on disposition.

* Note that no data is transferred if Part A, “Simplified reporting method,” has been completed in Form T1135.

Transfer from the RENTAL form into Form T1135*

A transfer of data from the RENTAL form into the T1135 form can be made when the rental property is located outside Canada.

In order for the program to transfer data, select the check boxes Foreign source and Select this box to transfer the UCC at the end of the year for the property to Form T1135 as cost amount at year-end. In addition, if you want to transfer the adjusted cost base of the land, you must also answer “Yes” to the question Does this rental property include land? in the “Identification” section.

The address, the country code, the gross income, the total amount of UCC at the end of the year and, if applicable, the adjusted cost base calculated in the “Land – MEMO code” section of Form Additions and Dispositions Workchart are transferred to category 5, “Real property outside Canada (other than personal use and real estate used in an active business).” When the rental property is held by a partnership, only the address and the country code are transferred.

Where the property is depreciable property in a prescribed class, the cost amount normally corresponds to the undepreciated capital cost of the property. However, for purposes of calculating the cost amount in Form T1135, in certain situations, the program cannot correctly calculate the amount to be transferred. The situations for which you will need to adjust the amount using an override in Form T1135 are the following: when there is a change in use of an asset; when the proportion of use of property used to earn income from a business increases; and when there is acquisition of depreciable property of a person with whom the corporation is at arm's length. Please refer to the definition of “cost amount” as defined in subsection 248 (1) of the ITA.

* Note that no data is transferred if Part A, “Simplified reporting method,” has been completed in Form T1135.

Electronic Filing

The T1135 form is transmitted separately from the T2 return. However, the electronic filing of the T1135 form has been implemented in the program so that you can transmit both the T2 return and the T1135 form at the same time.

Alternatively, you can transmit the T2 return without the T1135 form or the T1135 form without the T2 return.

Consult the Electronic transmission to the CRA topic for more information on how to proceed to transmit this form.

The program defines the status of the check boxes Were all diagnostics related to Form T1135 corrected in the T2 EFILE diagnostic tab?, Were all diagnostics with the "T1135" mention and relating to electronic filing corrected in the CCH diagnostic tab? and Form T1135 applicable, based on the corporation’s information (e.g. based on the corporation’s name, its Business Number (BN) and address comply with EFILE requirements) and the data entered in the T1135 form.

If you selected the T1135 form for electronic transmission and one of the above mentioned boxes is not selected, it is important that you verify the diagnostics to make the required corrections.

Provided the T1135 form is selected for EFILE and there are no problems with the data on the form, the T1135 form will have a status of “Eligible” if:

• the answer to the question Did the corporation own specified foreign property in the year with a cost amount over $100,000 (Canadian)? is “Yes.”
• the check box Your firm has not been engaged to file Form T1135 is not selected; and
• the check box Form T1135 will be transmitted or paper-filed at a later date is not selected.
  OR
• the check box If this is an amended return check this box. is selected.

The information on the transmission status of the T1135 form is also available using the File/Properties command (F11).

You can also transmit an amended T1135 form. You must indicate that the T1135 form is amended using the check box provided at the top of the form.

If the amended T1135 form has already been transmitted and has a T1135 EFILE status of “Accepted,” override the T1135 EFILE status in the File/Properties (F11) dialog box and change the status to “Eligible” in order to transmit the form.

Note that you cannot electronically transmit Form T1135 using a WAC with the program. An EFILE number must be used.

The following instructions are taken from the version for the 2015 and later taxation years of Form T1135.

All legislative references on this form refer to the Income Tax Act (the Act).

If the reporting taxpayer is a partnership, references to year or taxation year should be read as fiscal period and references to taxpayer should be read as partnership.

Do you have to file this form?

All Canadian resident taxpayers (including non-resident trusts deemed resident in Canada by section 94 of the Act) are required to file the Form T1135, Foreign Income Verification Statement if at any time in the year the total cost amount of all specified foreign property to the taxpayer was more than $100,000 (Canadian).

An individual (other than a trust) does not have to file Form T1135 for the year in which the individual first becomes a resident of Canada (section 233.7 of the Act).

The following entities do not have to file this form:

• a mutual fund corporation or mutual fund trust;
• a non-resident-owned investment corporation;
• a person all of whose taxable income is exempt from Part I tax;
• a registered investment under section 204.4 of the Act;
• a trust described in any of paragraphs (a) to (e.1) of the definition of trust in subsection 108(1) of the Act;
• a trust in which all of the persons beneficially interested are persons described above;
• a partnership in which all the members are persons described above; and
• a partnership where the share of the partnership's income or loss attributable to non-resident members is 90% or more of the income or loss of the partnership.

What property do you have to report?

You are required to report all specified foreign property in accordance with subsection 233.3(1) of the Act which includes:

• funds or intangible property (patents, copyrights, etc.) situated, deposited or held outside Canada;
• tangible property situated outside of Canada;
• a share of the capital stock of a non-resident corporation held by the taxpayer or by an agent on behalf of the taxpayer;
• an interest in a non-resident trust that was acquired for consideration, other than an interest in a non-resident trust that is a foreign affiliate for the purposes of section 233.4 of the Act;
• shares of corporations resident in Canada held by you or for you outside Canada;
• an interest in a partnership that holds a specified foreign property unless the partnership is required to file Form T1135;
• an interest in, or right with respect to, an entity that is a non-resident;
• a property that is convertible into, exchangeable for, or confers a right to acquire a property that is specified foreign property;
• a debt owed by a non-resident, including government and corporate bonds, debentures, mortgages, and notes receivable;
• an interest in a foreign insurance policy; and
• precious metals, gold certificates, and futures contracts held outside Canada.

Specified foreign property does not include:

• a property used or held exclusively in carrying on an active business;
• a share of the capital stock or indebtedness of a foreign affiliate;
• an interest in a trust described in paragraph (a) or (b) of the definition of "exempt trust" in subsection 233.2(1) of the Act;
• a personal-use property as defined in section 54 of the Act; and
• an interest in, or a right to acquire, any of the above-noted excluded foreign property.

For frequently asked questions or examples, see Questions and answers about Form T1135 on the CRA website at canada.ca/en/revenue-agency/services/ forms-publications/forms/t1135.html. How to complete this

How to complete this form

If the total cost of all specified foreign property held at any time during the year exceeds $100,000 but was less than $250,000, the form has been designed to provide you with the option of completing either Part A or Part B.

Where a particular specified foreign property has been reported all of the other fields associated with that particular property must also be completed. All nil amounts should be reported by indicating "0" in the corresponding field rather than leaving it blank. Amounts should be rounded to the nearest dollar.

Functional currency

If an election has been made under paragraph 261(3)(b) of the Act to report in a functional currency, state all monetary amounts in that functional currency, otherwise state all monetary amounts in Canadian dollars. The codes for the functional currencies are as follows:

AUD – for Australian dollar

USD – for U.S. dollar

GBP – for U.K. pound

EUR – for Euro

Identification

Tick the appropriate box to identify the category of taxpayer filing this form. Provide the taxpayer's name, address, and identification number. Provide the taxation year for which this form is being filed.

Reporting individual/partnership identification

For individual code, tick:

1. If the individual or the individual's spouse (common-law partner) is self-employed.
2. If the individual and the individual's spouse (common-law partner) are both not self-employed.

For partnership code, tick:

1. If end partners are individuals or trusts.
2. If end partners are corporations.
3. If end partners are a combination of 1 and 2 mentioned above.

An end partner is the final recipient (corporation, trust or individual) that receives an allocation of income from the partnership after the income has flowed through the various levels of a tiered partnership.

Categories of specified foreign property

This form contains seven tables corresponding to different categories of specified foreign property. Report the detail of each particular property that was held at any time during the year in the appropriate category.

Country codes

For the list of country codes, see List of country codes or the CRA publication T4061 entitled NR4 – Non-Resident Tax Withholding, Remitting and Reporting Guide, Appendix A .

The country code for each category should identify:

• Category 1 – the country where the funds are located;
• Category 2 – the country of residence of the non-resident corporation;
• Category 3 – the country of residence of the non-resident issuer;
• Category 4 – the country of residence of the trust;
• Category 5 – the country where property is located;
• Category 6 – the country where property is located;
• Category 7 – depending on the type of property, use the instructions above from categories 1 to 6.

If you are uncertain of the appropriate country code for a particular specified foreign property, select “OTH” for “Other.”

Cost amount/Maximum cost amount

Cost amount is defined in subsection 248(1) of the Act and generally would be the acquisition cost of the property. If you immigrate to Canada, the cost amount is the fair market value of the property at the time of immigration. Similarly, if you received specified foreign property as a gift, or inheritance, the cost amount is its fair market value at the time of the gift or inheritance.

The maximum cost amount during the year can be based on the maximum month-end cost amount during the year.

Foreign currency conversion

The amounts to be reported on Form T1135 should be determined in the foreign currency then translated into Canadian dollars. Generally, when converting amounts from a foreign currency into Canadian dollars, use the exchange rate in effect at the time of the transaction (i.e. the time the income was received or the property was purchased). If you received income throughout the year, an average rate for the year is acceptable.

The following summarizes how other amounts of the form should be translated:

• Maximum funds held during the year – the average exchange rate for the year.
• Funds held at year-end – the exchange rate at the end of the year.
• Maximum fair market value during the year – the average exchange rate for the year.
• Fair market value at year-end – the exchange rate at the end of the year.

Tables

Specified foreign property has been divided into seven (7) categories and should be reported in one of the following tables:

1. Funds held outside Canada

Funds held outside Canada include money on deposit in foreign bank accounts, money held with a foreign depository for safekeeping and money held by any other foreign institution at any time during the year. Prepaid debit or credit cards and negotiable instruments, such as cheques and drafts, are also included in this category. Marketable securities should be reported in category 3.

2. Shares of non-resident corporations (other than foreign affiliates)

Report all shares of non-resident corporations whether or not they are physically held in Canada.

Do not report shares of a foreign affiliate corporation. Generally, a foreign affiliate is a non-resident corporation (or certain non-resident trusts) of which you hold at least 1% of the shares individually, and, either alone or with related persons, hold 10% or more of the shares. If you have a foreign affiliate, you may have to file Form T1134, Information Return Relating to Controlled and Not Controlled Foreign Affiliates.

3. Indebtedness owed by non-residents

Report all amounts owed to you by a non-resident person (other than a foreign affiliate corporation) whether the indebtedness is held inside or outside Canada. Include all promissory notes, bills, bonds, commercial paper, debentures, loans, mortgages, and other indebtedness owed to you by a non-resident person. Marketable securities, such as guaranteed investment certificates, government treasury bills and term deposits issued by a non-resident, should be reported under this category.

4. Interests in non-resident trusts

Report all interests in non-resident trusts acquired for consideration, other than a non-resident trust that is a foreign affiliate for the purposes of section 233.4 of the Act.

If you contributed to, or received a distribution or loan from, a non-resident trust you may be required to file Form T1141, Information Return in Respect of Contributions to Non-Resident Trusts, Arrangements or Entities or Form T1142, Information Return in Respect of Distributions from and Indebtedness to a Non-Resident Trust.

5. Real property outside Canada

Report all real property located outside of Canada other than real property used in an active business or used primarily for personal use (such as a vacation property used primarily as a personal residence). Rental property outside Canada should be included in this category.

6. Other property outside Canada

This category should include any property that does not correspond to any of the other categories.

Other property includes:

• shares of corporations resident in Canada held by you or for you outside Canada;
• an interest in a partnership that holds specified foreign property where the partnership is not required to file the Form T1135;
• foreign insurance policies;
• precious metals or bullion (e.g., gold and silver) situated outside Canada;
• commodity or future contracts, options or derivatives that constitute a right to, a right to acquire, or an interest in, specified foreign property; and
• any other rights to, rights to acquire, or interests in, specified foreign property.

7. Property held in an account with a Canadian registered securities dealer or a Canadian trust company*

A taxpayer who held specified foreign property with a Canadian registered securities dealer (as defined in subsection 248(1) of the Act) or with a Canadian trust company (as determined under paragraph (b) of the definition of restricted financial institution in subsection 248(1) of the Act) is permitted to report the aggregate amount of all such property in this category.

The table for this category should be completed as follows:

• all of the property held with a particular securities dealer or trust company should be aggregated on a country-by-country basis;
• it is also acceptable to provide aggregate totals for each particular account on a country-by-country basis;
• refer to the "country code" instructions above to determine the appropriate country for each property; and
• the maximum fair market value during the year may be based on the maximum month-end fair market value.

* The program takes into account the maximum fair market value of property held in an account with a Canadian registered securities dealer or a Canadian trust company entered in category 7 when determining the total cost of all specified foreign property held during the year. According to section 233.3 of the ITA, the amount of $100,000 must be determined based on the cost of the property, not the fair market value, even though the fair market value is reported for category 7. Verify if the question 'Did the corporation own specified foreign property in the year with a cost amount over $100,000 (Canadian)?' has been answered correctly and override if necessary.

Certification

This area should be completed and signed by:

• the person filing this form in the case of an individual;
• an authorized officer in the case of a corporation;
• the trustee, executor or administrator in the case of a trust; or
• an authorized partner in the case of a partnership.

Due dates for filing this form

Form T1135 must be filed on or before the due date of your income tax return or, in the case of a partnership, the due date of the partnership information return, even if the income tax return (or partnership information return) is not required to be filed.

Filing by internet (EFILE or NETFILE)

Individuals, corporations, and partnerships can file Form T1135 electronically.

• Individuals can file Form T1135 electronically (EFILE or NETFILE) for the 2015 and subsequent taxation years.
• Corporations can EFILE Form T1135 electronically for the 2014 and subsequent taxation years.
• Partnerships can file Form T1135 electronically (EFILE or NETFILE) for the 2017 and subsequent taxation years.

Trusts are required to file a paper copy of this form.

• EFILE – Your EFILE service provider, including a discounter, can complete and file your Form T1135 for you if prepared with tax preparation software certified by the CRA for the internet filing of Form T1135. For more information, go to EFILE for individuals and EFILE for corporations.
• NETFILE – You can file your Form T1135 by Internet if prepared with tax preparation software certified by the CRA for the internet filing of Form T1135. Most individuals are eligible to NETFILE. For more information or to file your Form T1135, go to NETFILE at canada.ca/netfile.

Filing a paper return

Form T1135 can be attached to your income tax return, or partnership information return, and mailed to your tax centre. Alternately, Form T1135 can be mailed separately to the following address:

Winnipeg Taxation Centre
Data Assessment & Evaluation Programs
Validation & Verification Section
Foreign Reporting Returns
66 Stapon Road
Winnipeg MB R3C 3M2

Penalties for non-compliance

There are substantial penalties for failing to complete and file Form T1135 accurately and by the due date. For additional information regarding penalties, see the Table of penalties CRA website at canada.ca/en/revenue-agency/ services/forms-publications/forms/t1135.html.

Voluntary disclosures

To promote compliance with Canada's tax laws, we encourage you to correct your tax affairs through the Voluntary Disclosures Program. For more information, see Information Circular IC00-1R6, Voluntary Disclosures Program (VDP) or visit the CRA website.

More information

If you need more information visit our website at canada.ca/taxes. Alternatively you can call general enquiries at:

• 1-800-959-5525 for businesses, self-employed individuals and partnerships; or
• 1-800-959-8281 for individuals (other than self-employed individuals) and trusts.

You may also contact your local tax services office. Our addresses and fax numbers are listed on our website and in the government section of your telephone book.

Privacy notice

Personal information is collected under the authority of section 233.3 of the Act and is used to monitor compliance with the foreign reporting requirements related to offshore investments. Information may also be used for the administration and enforcement of the Act, including audit, enforcement action, collections, and appeals, and may be disclosed under information-sharing agreements in accordance with the Act. Incomplete or inaccurate information may result in various compliance actions, including the assessment of monetary penalties.

Your Social Insurance Number is the authorized number for income tax purposes under section 237 of the Act and is used under certain federal programs.

Information is described in personal information bank CRA PPU 035 in the Canada Revenue Agency (CRA) chapter of the Info Source publication, at canada.ca/cra-info-source. Personal information is protected under the Privacy Act and individuals have a right of protection, access to, and correction of their personal information. Further details regarding requests for personal information at the CRA can be found at canada.ca/cra-access-information-privacy.