Principal Issues: Prescribed Form T1135
Position: Extension of reassessment period
Reasons: 2013 Federal Budget proposals; general comments provided.
2013 STEP CANADA ROUNDTABLE, June 10 & 11, 2013
QUESTION 3. Extended Reassessment Period / Prescribed Form T1135
Section 8 of the Notices of Ways and Means Motions released pursuant to the 2013 Federal Budget on March 21, 2013 proposes to extend the normal reassessment period for taxpayers by three years in certain cases. One such case is where prescribed form T1135 was not filed on time or where the required information is not provided.
Can you confirm whether the extension of normal reassessment period applies for all purposes or just to income derived from the unreported foreign assets?
There is some uncertainty as to how to complete form T1135 as it now stands, here are two examples:
If U.S. shares or U.S. bonds are held in a UK brokerage account, should these be coded U.S. or U.K.?
If a person has capital gains and losses, where the gains are foreign and the losses are Canadian (so that no capital gains results overall), what should go on the T1135 form?
In view of the serious implications of the proposed change, will CRA be revising form T1135 and clarifying the instructions?
CRA Response
The proposed amendments in the 2013 Federal Budget would extend the normal reassessment period by three years for all purposes if both of the following conditions have been satisfied:
- the taxpayer has failed to file the T1135 as and when required or has filed this form but failed to provide the required information in respect of a specified foreign property; and
- the taxpayer has failed to report an amount, in respect of a specified foreign property, that is required to be included in the taxpayer's income.
In addition proposed legislative amendments in Bill C-48 will unconditionally extend the normal reassessment period by three years where the assessment, reassessment or additional assessment is made to give effect to sections 94, 94.1 and 94.2.
With respect to the questions on completing the T1135 we provide the following responses:
If U.S. shares or U.S. bonds are held in a U.K. brokerage account, these should be coded as U.S. It is the residence of the corporation that issued the shares or the residence of the bond issuer that is relevant for purposes of the T1135.
If a person has capital gains and losses, where the gains are foreign and the losses are Canadian only the foreign gains are reported on the T1135. Only foreign properties and the income (loss) or gain (loss) on disposition of those foreign properties are reported on the T1135.
The instructions on the revised T1135 have been redrafted in order to clarify the filing requirements. In addition, the revised T1135 will include a link to the CRA website where frequently asked questions related to the T1135 have been addressed.
2013-048576
Steve Fron
