New Requirements for Canadians with Offshore Property & Income : CRA SOTW VANCOUVER, BRITISH COLUMBIA

[Alan Baggett]

New Requirements for Canadians with Offshore Property & Income : CRA SOTW

VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 25, 2013) - Parliamentary Secretary Cathy McLeod was in Vancouver today to announce the launch of a strengthened Foreign Income Verification Statement (Form T1135), one of the Economic Action Plan 2013 measures to crack down on international tax evasion and aggressive tax avoidance. Mrs. McLeod met with members of Certified General Accountants (CGA) Canada to discuss taxation issues, including how best to combat international tax evasion and aggressive tax avoidance.

"Our Government is committed to combating tax evasion and getting tough on tax cheats. Since 2006, we have introduced over 75 measures to improve the integrity of the tax system," said Parliamentary Secretary McLeod. "The strengthened reporting requirements are just one example of the actions being taken by our Government to crack down on tax cheats. These measures are great news for hardworking Canadians who pay their fair share and bad news for those who may seek to cheat the system."

Starting with the 2013 taxation year, Canadians who hold foreign property with a cost of over $100,000 will be required to provide additional information to the CRA. The criteria for those who must file a Foreign Income Verification Form (T1135) has not changed; however, the new form has been revised to include more detailed information on each specified foreign property.

Increased reporting requirements include:
the name of the specific foreign institution or other entity holding funds outside Canada;
the specific country to which the foreign property relates; and
the income generated from the foreign property.

The CRA will use the additional information to ensure all taxpayers comply with Canadian tax laws, through activities including education and audit. Failure to report income from domestic or foreign sources is illegal, and Canadians should know that the CRA actively pursues cases of non-compliance. Tax evasion and aggressive tax avoidance can lead to significant taxes, interest and penalties.

These measures will build on the recent commitments made by Prime Minister Stephen Harper at the G-8 Lough Erne Summit in Northern Ireland. The G-8 declaration and the Harper Government's Action Plan on Transparency of Corporations and Trusts will uphold a high level of transparency.

Economic Action Plan 2013 also proposes to extend the reassessment period for a tax year by three years if a taxpayer has failed to report income from a foreign property on their income tax return and Foreign Income Verification Form (T1135) was not filed, late-filed, or included incorrect or incomplete information concerning a foreign property.

In addition to the new filing requirements, Economic Action Plan 2013 proposed other strong new measures to combat international tax evasion and aggressive tax avoidance. These include:

the new Stop International Tax Evasion Program;
the mandatory reporting of international electronic funds transfers over $10,000 to the CRA; and,
streamlining the judicial process that provides the CRA authorization to obtain information from third parties such as banks.

The Harper Government also recently announced the creation of a dedicated team to implement these measures and a $30 million investment to target international tax evasion and aggressive tax avoidance.
"We are pleased to see the Government taking action on this important issue. Increased reporting requirements of large offshore assets will help to ensure that all Canadians are operating on a level playing field when it comes to their taxes," said Carole Presseault, Vice President of Government and Regulatory Affairs at CGA Canada. "Our members support the fight against tax evasion, as it hurts all Canadians by reducing government revenue that other law abiding taxpayers are required to make up, and providing an unfair advantage to those seeking to cheat the system."

FOR BROADCAST USE:
Parliamentary Secretary Cathy McLeod was in Vancouver today to announce the launch of a strengthened Foreign Income Verification Form, one of the Economic Action Plan 2013 measures to crack down on international tax evasion and aggressive tax avoidance. Mrs. McLeod noted that "the revamped Foreign Income Verification Form is just one example of the actions being taken by our Government to combat international tax evasion and aggressive tax avoidance."

-----------------------------------------------------------
Miss a Tax Tale Miss a lot!
Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com
------------------------------------------------------------
Alan Baggett – Tax Collector’s Bible - http://taxcollectorsbible.com/

[Canuck57]

Post by Alan Baggett
New Requirements for Canadians with Offshore Property & Income : CRA SOTW
VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 25, 2013) - Parliamentary Secretary Cathy McLeod was in Vancouver today to announce the launch of a strengthened Foreign Income Verification Statement (Form T1135), one of the Economic Action Plan 2013 measures to crack down on international tax evasion and aggressive tax avoidance. Mrs. McLeod met with members of Certified General Accountants (CGA) Canada to discuss taxation issues, including how best to combat international tax evasion and aggressive tax avoidance.

Which means they want to make it more difficult for average people to go
offshore and get a 5.65% low risk return for fixed incomes.

Post by Alan Baggett
"Our Government is committed to combating tax evasion and getting tough on tax cheats. Since 2006, we have introduced over 75 measures to improve the integrity of the tax system," said Parliamentary Secretary McLeod. "The strengthened reporting requirements are just one example of the actions being taken by our Government to crack down on tax cheats. These measures are great news for hardworking Canadians who pay their fair share and bad news for those who may seek to cheat the system."

Government and integrity in the same sentance is a oxymoron. I know for
a fact that Ottawa CRA has lost data on people.

Post by Alan Baggett
Starting with the 2013 taxation year, Canadians who hold foreign property with a cost of over $100,000 will be required to provide additional information to the CRA. The criteria for those who must file a Foreign Income Verification Form (T1135) has not changed; however, the new form has been revised to include more detailed information on each specified foreign property.

What planet did this moronic deceptive idiot come from? This has been
in place for many years now.

But government loves its BS.

Maybe McLeod needs a brain and a refresher basic reading course. Or ask
McLeod what drugs are in play.

[t***@gmail.com]

Seems like the best way to handle foreign income, particularly stocks, is to transfer it into TFSA; no need to report income or capital gains, avoid hassle of foreign tax credit.

[Alan Bowler]

Post by t***@gmail.com
Seems like the best way to handle foreign income, particularly stocks,
is to transfer it into TFSA; no need to report income or capital gains,
avoid hassle of foreign tax credit.

The problem with this is that you pay the foreign tax,
but don't get the credit.
RRSP's however are a good place to hold most foreign stocks
generally (when there is a tax treaty), you do not pay any foreign
taxes.

This is especially the case for dual Canadian-US citizens
since the US will demand taxes on earnings inside a TFSA
(but not ans RRSP).

For the 2014 income tax year, I found filling out the foreign
reporting form (T1135) quite easy. When all the holdings
are in a Canadian brokerage you only need a country by country
summary (in my case 2 lines), and the brokerage supplied
supplied all the information. This was a big improvement
from the 2013 filing where the instructions were ambiguous at best,
and no one seemed be available to answer questions.
(Searching the web only turned up accountants asking about how to
fill it out. In the past, I found the local tax office people
quite helpful in sorting stuff out. Harper's cutbacks meant
the local tax office would no longer talk to the general public,
and the CRA phone lines are never available in tax season.)

Of course, it is still silly that investments held in Canadian
brokerages need to be reported at all. CRA already has all that
information. Worse, it is clear that they don't seriously
look at the form anyway. A while back I was late filing
my return because of death in the family. At the time I was
not worried because we are told repeatly there is not penalty
when a refund is due, and I knew I had a refund coming. So
I filed a few weeks late and included the T1135. It turned out
that the "no penalty" rule does not apply to being late with the
T1135. A YEAR AND HALF later I was dinged with a fine for that
late filing; obviously, CRA just sat on the form for over
a year.

There is some reason for CRA to expect T1135 information
on foreign property held outside the country, but requiring
filings for stocks and bonds in Canadian brokerages is just
duplication that wastes time and money.

[t***@gmail.com]

Post by Alan Baggett
New Requirements for Canadians with Offshore Property & Income : CRA SOTW
VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 25, 2013) - Parliamentary Secretary Cathy McLeod was in Vancouver today to announce the launch of a strengthened Foreign Income Verification Statement (Form T1135), one of the Economic Action Plan 2013 measures to crack down on international tax evasion and aggressive tax avoidance. Mrs. McLeod met with members of Certified General Accountants (CGA) Canada to discuss taxation issues, including how best to combat international tax evasion and aggressive tax avoidance.
"Our Government is committed to combating tax evasion and getting tough on tax cheats. Since 2006, we have introduced over 75 measures to improve the integrity of the tax system," said Parliamentary Secretary McLeod. "The strengthened reporting requirements are just one example of the actions being taken by our Government to crack down on tax cheats. These measures are great news for hardworking Canadians who pay their fair share and bad news for those who may seek to cheat the system."
Starting with the 2013 taxation year, Canadians who hold foreign property with a cost of over $100,000 will be required to provide additional information to the CRA. The criteria for those who must file a Foreign Income Verification Form (T1135) has not changed; however, the new form has been revised to include more detailed information on each specified foreign property.
the name of the specific foreign institution or other entity holding funds outside Canada;
the specific country to which the foreign property relates; and
the income generated from the foreign property.
The CRA will use the additional information to ensure all taxpayers comply with Canadian tax laws, through activities including education and audit. Failure to report income from domestic or foreign sources is illegal, and Canadians should know that the CRA actively pursues cases of non-compliance. Tax evasion and aggressive tax avoidance can lead to significant taxes, interest and penalties.
These measures will build on the recent commitments made by Prime Minister Stephen Harper at the G-8 Lough Erne Summit in Northern Ireland. The G-8 declaration and the Harper Government's Action Plan on Transparency of Corporations and Trusts will uphold a high level of transparency.
Economic Action Plan 2013 also proposes to extend the reassessment period for a tax year by three years if a taxpayer has failed to report income from a foreign property on their income tax return and Foreign Income Verification Form (T1135) was not filed, late-filed, or included incorrect or incomplete information concerning a foreign property.
the new Stop International Tax Evasion Program;
the mandatory reporting of international electronic funds transfers over $10,000 to the CRA; and,
streamlining the judicial process that provides the CRA authorization to obtain information from third parties such as banks.
The Harper Government also recently announced the creation of a dedicated team to implement these measures and a $30 million investment to target international tax evasion and aggressive tax avoidance.
"We are pleased to see the Government taking action on this important issue. Increased reporting requirements of large offshore assets will help to ensure that all Canadians are operating on a level playing field when it comes to their taxes," said Carole Presseault, Vice President of Government and Regulatory Affairs at CGA Canada. "Our members support the fight against tax evasion, as it hurts all Canadians by reducing government revenue that other law abiding taxpayers are required to make up, and providing an unfair advantage to those seeking to cheat the system."
Parliamentary Secretary Cathy McLeod was in Vancouver today to announce the launch of a strengthened Foreign Income Verification Form, one of the Economic Action Plan 2013 measures to crack down on international tax evasion and aggressive tax avoidance. Mrs. McLeod noted that "the revamped Foreign Income Verification Form is just one example of the actions being taken by our Government to combat international tax evasion and aggressive tax avoidance."
-----------------------------------------------------------
Miss a Tax Tale Miss a lot!
Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com
------------------------------------------------------------
Alan Baggett - Tax Collector's Bible - http://taxcollectorsbible.com/

"RRSP's however are a good place to hold most foreign stocks
generally (when there is a tax treaty), you do not pay any foreign
taxes."

And none withheld by foreign payer? Same would be true for foreign stocks in RIF accounts?

You probably are aware that: "Every person who fails to report an amount required to be included in income, and who has failed to report such amount on a return for any of the three preceding taxation years, is liable to both a federal and provincial/territorial penalty each equal to 10% of the amount that must be included in income." Thanks for the info.

[Alan Bowler]

Post by t***@gmail.com
"RRSP's however are a good place to hold most foreign stocks
generally (when there is a tax treaty), you do not pay any foreign
taxes."
And none withheld by foreign payer?

As long as that is in the tax treaty, which it is for the USA.
However, check that your broker does to the appropriate paperwork
to ensure that they are no withholdings. They always do this for
US stocks, but not always for other countries.
An article in the Globe said that it is possible to file
the paperwork yourself, but that is likely a pain.

Note that there is no withholding tax on UK stocks in or out of an RRSP.

Post by t***@gmail.com
Same would be true for foreign stocks in RIF accounts?

Yes it is true for RRIFs, but not TFSAs or RESPs.

Post by t***@gmail.com
You probably are aware that: "Every person who fails to report an
amount required to be included in income,
and who has failed to report such amount on a return for any of
the three preceding taxation years, is liable to both a federal
and provincial/territorial penalty each equal to 10% of the amount
that must be included in income." Thanks for the info.

However, this does not apply to stocks held in an RRSP.
I presume this is because it is assumed that the tax is sure to
collected when the money is eventually withdrawn.

I still don't understand why T1135 is needed for foreign stocks
in a Canadian brokerage non-retirement account.