Principal Issues: 1. How are capital gains, losses, and interest earned in a U.K. ISA treated for tax purposes in Canada?
2. Will investments in U.K. ISAs need to be reported on Form T1135?
3. Will there be a deemed disposition of the investments in the U.K. ISA when the individual emigrates from Canada?
Position: 1. They will be reported in the income of the individual who is now a Canadian resident and will be subject to taxation in Canada.
2. In this scenario, the investments held in the U.K. ISA fall into the definition of "specified foreign property" as defined in the Act. If the total cost amount of all the "specified foreign property" held by the individual at any time in the year exceeds $100,000, then Form T1135 will need to be completed.
3. In this scenario, there will be no deemed disposition of the investments in the U.K. ISA at the time of emigration from Canada, since the criteria in subparagraph 128.1(4)(b)(iv) of the Act are met.
Reasons: See reasons noted above.
