TORONTO, March 14, 2018 /CNW/ - As Canadians are in the process of filing their taxes, many don't realize that they're required to report the details of assets abroad with a total cost amount of over $100,000 on their return. And many Canadians don't realize that there are penalties for non-disclosure or late filing of these items of $25 per day, up to $2,500 per taxpayer.
Foreign property encompasses everything from real estate, bank accounts, investment accounts, shares in foreign companies and bonds. Luckily, there are a couple of exemptions to keep in mind, including property overseas solely for personal-use or property used for business. However, as soon as a property is rented, it must be reported as a foreign asset. Canadian registered accounts (RRSPs, TFSAs, RRIFs) are also exempt.
Those with foreign property holdings with a cost amount of more than $100,000 will need to complete and file Form T1135 Foreign Income Verification Statement by the deadline.
Some examples of foreign asset scenarios to consider:
- John has a condo in Florida, which he rented out for most of the 2017 calendar year before selling it in December for $225,000. He'll have to file Form T1135 because the cost was over $100,000 and it wasn't a "personal-use" property and John would also need to file a U.S. tax return.
- Last year Lisa inherited shares of a U.K. company from her brother. Her brother paid $75,000 for the shares and thus never had to file Form T1135. However, when Lisa inherited the shares they had increased in value and were worth $105,000, so she would be required to file Form T1135.
- Sean has shares in a Canadian company, which is traded on a stock exchange outside of Canada. Despite his stocks being costing over $100,000, he does not have to report this as foreign income – many Canadian companies trade outside of the country.
Canadians are encouraged to take time to understand how assets abroad will affect their return. For more information, visit one of H&R Block's offices or online at www.hrblock.ca.
About H&R Block Canada
For over 50 years, H&R Block Canada is Canada's tax leader, with over 1,100 locations across Canada, and free do-it-yourself Tax Software. H&R Block's comprehensive education program, Tax Academy, trains experts and continually updates their skills. Learn more at www.hrblock.ca or 1-800-HRBLOCK.
SOURCE H&R Block Canada Inc.
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