Specified foreign property refers to certain types of assets held by Canadian residents outside of Canada, such as real estate, shares, bonds, and bank accounts. The Canada Revenue Agency (CRA) requires individuals to report and disclose information about specified foreign property if the total cost of all such assets exceeds a certain threshold.
A more thorough response to your request
Specified foreign property refers to certain types of assets held by Canadian residents outside of Canada, such as real estate, shares, bonds, and bank accounts. The Canada Revenue Agency (CRA) requires individuals to report and disclose information about specified foreign property if the total cost of all such assets exceeds a certain threshold.
When it comes to understanding the concept of specified foreign property, it is important to highlight the Canadian tax laws and regulations. The CRA has specific rules in place to ensure that Canadian residents accurately report their worldwide income and assets, including those held outside the country. The purpose of reporting specified foreign property is to prevent tax evasion and ensure individuals fulfill their tax responsibilities.
To provide a more detailed explanation, specified foreign property can include a wide range of assets. This can encompass foreign investment properties, vacation homes, bank accounts held abroad, shares of foreign corporations, bonds issued by foreign entities, and even interests in non-resident trusts. Essentially, any asset located outside of Canada may fall under the definition of specified foreign property.
The threshold for reporting specified foreign property varies depending on an individual’s residency status in Canada. Canadian residents (including individuals who are deemed residents for tax purposes) must report specified foreign property if the total cost exceeds CAD $100,000 at any point during the taxation year. On the other hand, individuals who are non-residents of Canada for tax purposes are not required to report specified foreign property.
It is crucial for Canadian residents to accurately report specified foreign property to comply with tax regulations. Failure to do so can result in penalties and interest charges imposed by the CRA. Additionally, the CRA actively collaborates with international tax authorities to exchange information and detect potential tax evasion.
Now, let us delve into a quote from renowned economist and Nobel laureate, Joseph Stiglitz, about tax transparency and compliance: “Transparency is not just about costs and technicalities; it is also about ethics and fairness.” Stiglitz emphasizes the importance of transparency in tax matters, highlighting how it is not just a matter of rules and regulations but also reflective of an ethical and fair approach to taxation.
Here are some interesting facts about specified foreign property and the CRA’s regulations:
-
The reporting requirement for specified foreign property was introduced in 2013 as part of the CRA’s efforts to enhance tax compliance and close loopholes.
-
The $100,000 threshold for reporting specified foreign property applies to the cost amount, not the fair market value. However, the fair market value of the property needs to be reported when disposing of such assets.
-
Individuals who fail to report specified foreign property can face penalties of up to $2,500 per year for each failure to report, along with potential criminal prosecution for tax evasion.
-
The CRA provides guidelines and forms to assist individuals in reporting specified foreign property, such as Form T1135, which is used for foreign income verification.
-
The penalty for making false statements or omissions on the reporting of specified foreign property can be severe, reaching up to 200% of the tax that was sought to be evaded.
To further illustrate the various types of assets that may qualify as specified foreign property, here is a table showcasing some examples and their corresponding categories:
| Type of Asset | Category |
|---|---|
| Foreign real estate | Immovable property |
| Shares of a foreign corporation | Securities |
| Foreign bank accounts | Deposits |
| Bonds issued by a foreign entity | Debt obligations |
| Interests in non-resident trusts | Trust interests |
In conclusion, the reporting of specified foreign property is an essential requirement for Canadian residents to ensure tax compliance. Understanding the different types of assets that fall under this category, the threshold for reporting, and the potential penalties for non-compliance is crucial to avoid facing legal consequences. As Joseph Stiglitz’s quote underlines, tax transparency is not merely a matter of adherence to technicalities but is rooted in ethics and fairness.
See the answer to “What is specified foreign property CRA?” in this video
In the YouTube video titled “Foreign Property and T1135,” Sunny Waterman explains the significance of the foreign property question on tax returns and the importance of accurately reporting all income from worldwide sources. The government utilizes this question to track potential undisclosed foreign assets, especially those owned for investment purposes. Foreign property encompasses not just real estate but also ownership shares in foreign corporations. If individuals answer yes to the foreign property question, they must file Form T1135, which lists all foreign property with a value of $100,000 or more. While filing this form does not result in additional taxes, failing to do so can lead to substantial penalties. Sunny suggests consulting tax professionals for assistance or to explore the voluntary disclosure program if unsure about filing.
Online, I discovered more solutions
Specified Foreign Property is a term used by the Canada Revenue Agency (CRA) to refer to assets held outside of Canada. If the property held during the relevant tax year costs over $100,000 CAD, it must be reported to the CRA on a T1135 form. Examples of specified foreign property include foreign bank accounts, shares in foreign companies, interests in non-resident trusts, and tangible property situated outside Canada. The CRA introduced a streamlined reporting option for specified foreign property held in accounts with Canadian registered securities dealers or trust companies in 2014.
What is Specified Foreign Property? Specified Foreign Property are assets held outside of Canada. The threshold for reporting to the CRA on a T1135 form is if the property that you have held during the relevant tax year costs over $100,000 CAD.
Specified foreign property typically includes: amounts in foreign bank accounts, but not US funds in a Canadian financial institution, shares in foreign companies, even if held in a Canadian brokerage, shares of corporation residents in Canada held outside Canada (e.g., in a brokerage account in another country), interests in
The CRA requires you to report any “specified foreign property” costing more than $100,000. The following are examples of foreign property: Any debt you owe, including bonds (corporate and government), debentures, mortgages and notes receivable.
Specified foreign property is defined in subsection 233.3 (1) of the Income Tax Act and includes: funds or intangible property (patents, copyrights, etc.) situated, deposited or held outside Canada tangible property situated outside Canada a share of the capital stock of a non-resident corporation
In 2014, the situation prompted CRA to introduce a streamlined reporting option for specified foreign property held in accounts with Canadian registered securities dealers or trust companies. Specified foreign property includes foreign corporations, bank accounts, loans, trust interests, some types of real estate and property