In this era of heightened international investment monitoring, the Canada Revenue Agency (CRA) has changed how it wants Canadian taxpayers to report foreign assets.
This change has been implemented to counter efforts of individuals who are trying to avoid taxes by holding investments outside of Canada.
Previously, when taxpayers held assets costing more than $100,000, they were required to disclose what region of the world the assets were held, the amount of total income they earned from all assets overseas and the estimated cost of those assets within five large income groups.
Starting this year, if you hold more than $100,000 of assets outside of Canada, you will be required to list each asset – whether it be the specific institution holding the investment, or the description of the land which is held – when filing your 2013 tax return.
You must also note the original cost of your asset and the country of your investment’s origin. In addition, the amount of income you earned on each investment must be listed. If you hold an investment or bank account which fluctuates in value during the year, you are now also required to list the highest balance of the investment/ account during the year, as well as the value at the end of the year.
In some cases, it is possible that the new reporting requirements may allow you to report less information to the CRA.
If you receive a T3 or a T5 slip from your international investments, you are now no longer required to report the investment on the T1135 schedule.
One thing which has not changed from the previous reporting of these assets is the requirement that you report the cost of the asset, but not the market value of the investment.
Therefore, if you purchased an asset which cost $70,000 and is now valued at $150,000, you still do not need to report the asset. In addition, if you co-own an investment with another individual, and the cost for each of you was less than $100,000, you also do not need to report this investment.
On the other hand, the CRA will look at the total value of all your international investments to determine if you are required to file this form.
If you own one investment which cost $60,000, another investment which cost $50,000, and a bank account holding $500, you have more than $100,000 of total investments and accounts, and you must list all three of these investments and accounts on the schedule.
The new investing reporting regime is quite similar to the requirements that are currently in place in the United States.
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