CRA states that it will not apply a penalty for reasonably estimating an unknown amount, e.g., the “cost amount” of a pension interest

An Australian Superannuation Fund (or “Super Fund”) is a government-regulated trust that has been registered and approved by the Australian Government and is funded by contributions from employers and individuals over their working lives in order to provide retirement incomes. As the investment earnings within the Super Fund are subject to Australian tax (albeit, at a favourable rate), it does not qualify as an “exempt trust,” so that a Canadian beneficiary’s interest is considered to be specified foreign property, and the individual is required to file T1135s reporting inter alia the “cost amount” of the individual’s interest in the fund.

“Cost amount” in the case of a right (other than capital property) to receive an amount is defined as such amount. CRA stated that such amounts “include all amounts… which the individual has a legal right to receive, even if the amounts are to be received in the future,” and then stated:

[W]here it is not possible to determine the cost amount of a specified foreign property, taxpayers should use their best efforts to reasonably estimate the cost amount of the property. [CRA] will not penalize taxpayers who have made reasonable estimates based on the best available information. The onus is on the taxpayer to demonstrate the reasonableness of any such estimates, if requested.

It is unclear how closely this concept of “reasonable estimates based on the best available information” aligns with the jurisprudential concept of a due diligence defence to penalties, such as the penalty under s. 162(7) which (as interpreted in 2012-0458401I7) normally applies to materially incomplete T1135s (see Kokanee).

Neal Armstrong. Summaries of 2015-0595461E5 under s. 233.3(1) – specified foreign property - (n), s. 248(1) – cost amount – (e), s. 162(7).