Shortly before my parents separated, we undertook a long summer drive to Utah to visit relatives and see some sights. While on this journey, the freedom my sister and I were granted in the luggage area of our old Woody Wagon was the stuff of a Norman Rockwell sketch.
With the rear-facing back seat folded down into the floor, and the back window rolled down, we played carelessly on the car mats, tossing unwanted bread crusts and such at the vehicles behind us, and making obnoxious facial gestures toward any onlookers.
Maybe it was during a particularly hot stretch somewhere in eastern Idaho, I don't recall, but somewhere along the way we somehow convinced mom and dad that the additional airflow achieved by letting the tailgate down was a good idea. Fear not. To shore up our safe journey, they tied a string across the back, allowing us to play freely there while a busy stretch of freeway zipped along within reach.
No seatbelts. No air conditioning. No plasma visuals to watch or play -- just a multi-sensory wide-screen panorama magically dancing behind us in full splendor.
Somewhere along that journey I used my meager savings to purchase a Lone Ranger cowboy hat, along with a toy holster and a set of plastic pistols. I was warned that if I lost the hat out the window, I would never see it again. This caution, and the old-fashioned policing garb itself, temporarily transformed me from silly to stoic.
But within minutes of fitting the coveted crown on my head, the heat in the vehicle got to me again, and I wiggled-off my inner Kemosabe, poking my head out the back for a breather. The cowboy hat shot off my little noggin like a rocket, and launched itself into full flight toward a nearby cornfield. I immediately began to wail, but my parents pressed on, barely slowing down other than to scold me.
My first and dearest investment in foreign nostalgia was gone forever.
In recent years, many Canadians investors have found some legitimate opportunities in the US which were too attractive to ignore. The following is a synopsis of their reporting requirements here at home:
2013 Changes to Foreign Asset Reporting Requirements for Canadians
For many years, Canadian residents have been required to annually disclose their foreign assets to the Canada Revenue Agency (CRA) if the assets' cumulative cost exceeded C$100,000 at any time in the calendar year. The assets are disclosed through the filing of a Form T1135 - Foreign Income Verification Statement.
The 2013 Federal Budget included a number of measures to combat international tax evasion and aggressive tax avoidance including a revised Form T1135. The revised form requires the disclosure of significantly more information than previously required. In an effort to assist taxpayers in transitioning to the new reporting requirements, the CRA has provided transitional reporting guidance for the 2013 tax year. The deadline for filing the T1135 for 2013 has been extended from the income tax return filing deadline for the year to July 31.
Who Has to File Form T1135?
The reporting requirement applies to Canadian resident individuals, corporations, partnerships and trusts owning "specified foreign property" with a cumulative cost exceeding C$100,000 at any time in the year.
Specified foreign property generally includes (but is not limited to):
Funds held in foreign bank accounts and foreign investment accounts, even if holding Canadian securities;
Shares of foreign corporations, even if held in Canadian investment accounts;
Bonds or debentures issued by foreign governments or foreign corporations;
Land and buildings located outside Canada (for example, foreign rental property);
Interests in non-resident trusts;
Interests or units in foreign mutual funds.
Specified foreign property does not include:
Foreign assets held in tax-deferred accounts such as RPPs, RRSPs, RRIFs, RESPs, RDSPs, TFSAs and other registered accounts;
Units of Canadian-registered mutual funds that invest in foreign securities (for example, RBC U.S. Equity Fund);
Personal-use property (such as vacation homes, vehicles, jewellery, artwork, etc.);
Property used or held exclusively in the course of carrying on an active business;
A cowboy hat acquired for a child's personal use.
The $100,000 (Canadian dollars) threshold refers to the total cost of foreign assets, not the cost of each asset individually.
The content in this article is for information purposes only and is not intended to provide tailored tax or legal advice. To ensure that your own circumstances have been properly considered you should obtain professional advice from a qualified tax advisor before acting.
Mark Ryan is an advisor in Prince George with RBC Wealth Management, Dominion Securities, and can be reached at [email protected].
