What is the maximum undeclared amount of cash one can carry?
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Posted on: 17-03-15 15:23:19
I may be wrong but common sense suggests , report it in the year it is inherited . Any appreciation in value thereafter should be liable for capital gains tax.
Chandresh might be able to explain it better.
Another thing that comes to my mind is - Capital Gains tax would have to be paid in India also in case assets appreciate over time .... So do we have to pay capital gains tax twice OR is there any treaty between the 2 countries under which only the balance needs to be paid ...?
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Fido.
Hi guys - let me make a few clarifications:
Foreign property does not mean only real estate - in Canadian terms, it means all property - real estate, cash, jewelry, loans owed to you etc. etc.
The declaration is mandatory once it is more than 100kCAD in value. This could be when you landed or after a few years (meaning thereby, either the market value appreciated, or you made other income outside of Canada). This also includes shares of foreign companies even if bought while sitting in Canada (so you buy Google shares - it has to be included in the calculation of foreign property).
The earlier form 1135 was very simple - you had to simply declare the total value and nature - like real property or cash or other. However, since 2014 (for 2013 year income), the form has changed and it really asks you for a lot of information - including the highest value that asset had during the year. So if you started the year with a value of say 110k, which appreciated to 150K in June, but came down to 130k by year end, you have to declare the maximum value of 150k during the year. It is a reasonably complicated form now.
Since per Canadian tax laws, a Canadian resident is required to declare world income, even if the total foreign property value is less than 100k, the income has to be declared each year. Similarly, if the property has been over 100k value, but has no income - the value has to be declared on form 1135, and NIL income against it.
If someone did not declare it on his first tax return after landing in Canada, but wants to declare it later, he can do so, either by refiling old returns or by contacting CRA to inform them about this, with the market value of the property on the day that person became a landed immigrant of Canada. They will then advise what should be done - including declaring if there has been income on that property in the years after landing and before declaration.
It is not a simple issue and can be bothersome - for people who have not declared it. My personal advice to new immigrants is to declare everything it very first year - and if possible, declare a higher market value than it is, so that gives you a capital gain cushion!
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Chandresh
Advice is free – lessons I charge for!!
Quote:
Originally posted by Many
very clear reply irock and Fido; so i need state the value of the foreign property too, besides a tick mark to indicate foreign holding more than CAD 100,000/- Thank you, I get it.
just out of curiosity, is this your first time filing Income Tax with CRA (in Canada) ???
if it is not & you didn't notified them for so many years, as Chandresh suggested, you should do that as early as possible. There is Voluntary Disclosures Program for CRA wherein you can correct you mistakes....
http://www.cra-arc.gc.ca/gncy/nvstgtns/vdp-eng.html" target="_blank">http://www.cra-arc.gc.ca/gncy/nvstgtns/vdp-eng.html</a>
But if you try to include the foreign property now all of sudden without changing the old returns, then you might get into trouble latter on....
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i..........rock........!!!!!
Quote:
Originally posted by northyork_desi
How does the reporting work with inheritance? Lets say I got a property from my parents as inheritance . When would I have to report it?
Thanks
Fido is right....you report it in the same year you got inherited. But do keep all the papers like will of your parents, Transfer papers & also if possible make a real estate appraisal of the property in that year. Appraisal paper will serve you as your adjusted cost base which would help you calculate your profit when you sell your property in the future. Also if CRA gets pissed off & ask for explanation of you large capital gain, you can show them the papers...
And also as Chandresh suggested show the appraisal value higher so that later on you save on capital gain taxes...
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i..........rock........!!!!!
irock, in response to your curiosity post: I was a new immigrant in 2013; availed assistance of some Volunteer organisation to file my returns for Y2013. I remember the guy asking me if we had foreign property more than CAD 100K for each of us* Many and my spouse; I believe he then just tick marked the appropriate box.
This year I intend filing Online and doing the T1135 too with the required details.
Posts from Seniors have been very helpful !
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Many
Quote:
Originally posted by Many
Posts from Seniors have been very helpful !
That was the whole purpose of this site!!!
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Chandresh
Advice is free – lessons I charge for!!
Quote:
Originally posted by Many
irock, in response to your curiosity post: I was a new immigrant in 2013; availed assistance of some Volunteer organisation to file my returns for Y2013. I remember the guy asking me if we had foreign property more than CAD 100K for each of us* Full House and my spouse; I believe he then just tick marked the appropriate box.
This year I intend filing Online and doing the T1135 too with the required details.
Posts from Seniors have been very helpful !
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Canadians who hold foreign property in their non-registered brokerage accounts will no longer have to go through the arduous task of collecting detailed information for the purpose of their 2013 foreign property filing.
Under the tax rules, if at any time in the year the total cost amount of all “specified foreign property” you own exceeded $100,000, you have to file Form T1135, the “Foreign Income Verification Statement.”
Specified foreign property includes: funds held on deposit outside of Canada, foreign real estate, other than personal residential real estate that isn’t income producing, and shares and debt of non-resident corporations, even if held in a Canadian non-registered brokerage account. Securities held in registered accounts like RRSPs, RRIFs, RESPs and TFSAs are exempt.
The penalty for failing to file this form on time is $25 per day, to a maximum of $2,500, which can increase if you knowingly or under circumstances amounting to “gross negligence” fail to file the form.
In an increased effort to combat international tax evasion by Canadians, last year’s budget promised to revamp and re-launch what it calls a “strengthened” Form T1135. The revised version of this form, released in June 2013 by the Canada Revenue Agency, asks for more detailed information about your foreign property, including the names of specific foreign institutions and countries where any foreign assets are located, the foreign income earned on those assets and the maximum cost amount of those assets during the year.
It was this latter requirement that was causing Canadian investors who are subject to the reporting rules to panic as to how they could possibly gather the information required on the highest cost amount of every foreign security owned. Many contacted their accountants who often referred them to their financial institutions.
A concerted lobbying effort to get some relief from the onerous, detailed reporting that was to be required for the T1135 reporting this tax season led to an announcement late Wednesday of a special transitional rule for 2013.
Under this transitional rule, if you held specified foreign property in an account with a Canadian registered securities dealer, you now simply have to report the combined fair market value of all such property at the end of the tax year, rather than reporting the details of each property. This combined value is to be included in Category 6 of Form T1135, under the heading “Other property outside of Canada.” More details on how to take advantage of this transitional reporting can be found on page 4 of the updated Form T1135 on the CRA website.
In addition, the CRA announced an extension of the filing deadline for Form T1135 for 2013 to July 31, 2014, for all taxpayers, “in order to provide further assistance in the transition to the new reporting requirements.”
Whether the transitional rule will be extended for future years is unknown, but the bigger question remains: why do taxpayers need to report foreign property held in Canadian brokerage accounts in the first place? After all, the CRA already gets information about foreign income paid to those accounts through the T3 and T5 reporting system and gets information about the disposition of securities through the T5008 reporting.
FH.
http://business.financialpost.com/2014/02/27/ottawa-simplifies-tax-rule-on-foreign-property-assets/
