What exactly goes on Form T1135?

[FLBiker]

I'm a new permanent resident of Canada (and US Citizen) and I'm curious about Form T1135.  I'm not doing my own taxes this year, but I want to understand everything so that I can do them again in the future.

What exactly goes on Form T1135?

The short version -- other than our house, we didn't sell anything that cost more than $100K.  Does that mean we don't need to do Form T1135?

The longer version (dollar amounts in USD) --

• We sold our house (and closed after we moved) and cleared ~$125K (the house originally cost $143K).  Do we need to declare that?  (My thinking is no, based on it being for "personal use".)
• After we sold our house, for a brief moment (a couple of weeks) we had >$100K in a US Bank account.  Shortly thereafter, most of that was transferred to Canada.  Do we need to declare that?
• Our taxable account cost less than $100K, but it was in the US for a couple of months after we moved, now it's in Canada.  Combined with our US bank accounts, this likely "cost" more than $100K.  Again, we didn't sell anything here (just transferred in kind).
• In tax-sheltered accounts, we definitely have investments that cost more than $100K in the US.  Do we need to declare these?  If so, I can get some information as to the cost, but some of it is buried -- we rolled tIRAs into rIRAs a couple of years ago, and some of those tIRAs started 20 years old with firms that no longer exist.  If I need to declare these costs, what should I do?
• I see in the instructions to the form: "An individual (other than a trust) does not have to file Form T1135 for the year in which the individual first becomes a resident of Canada".   Does this mean I don't have to file this form this year?  I'd still like to better understand it (particularly in terms of if tax-sheltered accounts need to be reported) because I'll need to file it in future years.

If more information would help, please don't hesitate to ask.

Thanks!

[daverobev]

Personal use property is excluded.

T1135 is nothing to do with selling, it is about the CRA keeping tabs on you.

You need to declare IF you hold more than $100k CAD at any point during the year, of foreign domiciled shit. Rental properties, shares, ETFs.

You transferred your stuff to Canada - doesn't matter if the brokerage is Canadian, it is what you own. So if you own $100k of VT, VTI, whatever - at a Canadian brokerage - yeah you have to declare it.

You need to keep tabs on exchange rates as well, the joy, as you need to know the max value *in Canadian dollars*. I think you can do the exchange rate by monthly or quarterly average.

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1135.html

So yeah, you can report the same dollar multiple times.

It is cumulative, so once you hit that magic $100k you have to report every bank account, brokerage account etc you have outside Canada.

Your bullet points:

• You don't need to declare the house
• You do need to declare the cash in your bank account. If you had it in one (foreign) bank account then moved it to another, you'd need to report it both times. This is "1 Funds Held Outside Canada" on the form.
• Yup, 2. Shares of non-resident corps - individually, so if you have 15 ETFs and 35 shares that's 50 lines! And you get to report it again but in condensed form in 7!
• You need to check - generally 'pension' accounts are ignored, everything else is not treated as a tax shelter (the other way round, an RRSP is viewed favourably by the US I believe, but a TFSA is not)
• But yes you're in luck, you can ignore the above as you don't have to file it the year you land. For next year if you have > $100k CAD in (unregistered - again, check about pension holdings) non-Canadian cash + ETFs + shares then you have to report every cent - even if the ETFs and shares are with a Canadian brokerage

From a quck search, I came to https://philhogan.com/ira-401k-and-us-investments-for-canadians-faq/

Do I have to report my IRA or 401k on my T1135?

Canadian taxpayers that own foreign assets with a cost more than $100,000 are required to report and file form T1135 – foreign income verification form with the CRA. Although this form will be required for any non-registered investment and/or cash accounts, they are not required for IRA and 401k accounts.

I would check this a few more times - try the PersonalFinanceCanada subreddit. Also another page on that guy's site https://philhogan.com/everything-you-need-to-know-about-form-t1135/

[FLBiker]

This is excellent, thanks!  I didn't realize I'd need to report my US holdings at Questrade.  Oh well.  I still think that's easier that the alternative -- holding Canadian ETFs and having to go through the PFIC stuff on the US side.

I read through Phil Hogan's stuff -- and, unfortunately, he doesn't actually mention the specific types of tax-sheltered accounts we have in the US - 403b and 457b, plus a small state owned pension.  If those are excluded, we'll likely be below the $250,000, but if those are included we'll be over it.

My plan is to use a professional cross border tax person this year and next year.  Hopefully, after that, I'll be comfortable doing it myself.

Thanks again!

[daverobev]

"T1135 403b" into duckduckgo got me:

https://www.financialwisdomforum.org/forum/viewtopic.php?t=118019&start=25

Must ROTH IRA, 401a or 403b accounts be reported on the T1135 form?

On my spouse last year tax returns the tax preparer only listed her non-registered accounts on the T1135 form. For the ROTH IRA he filled an election and the 401a and 403b accounts are not listed at all. Is this OK?

Germack, based on a CPA Canada Q&A I found (and painfully read through), you do not have to report US retirement accounts.

    118. Are foreign pension arrangements, such as US individual retirement accounts (IRA), 401K plans and foreign pension plans, exempt from Form T1135 filing?

    ANSWER: Interests in certain trusts that are exempt from the trust disclosure requirements in section 233.2 are also excluded from the definition of specified foreign property. Such trusts include:
    • Trusts governed by a foreign retirement arrangement (which includes US IRAs)
    • Trusts resident in a country that imposes income taxes, where the trust is exempt from tax under that country’s laws and established with the principal purpose of providing pension, retirement or employment benefits.
    This definition is believed to cover most foreign retirement plans, including the common US plans noted above.

The link is here: https://www.cpacanada.ca/~/media/Site/c ... .pdf?la=en

[FLBiker]

Thanks!  So it sounds like the 403b is good.  My wife's pension should be OK as well.  457bs are the potential reporting issue.  Thanks again!