T1135 Foreign Income Verificiation (New Form)
May 23rd 2014, 4:12 pm
#76
UCanadian
Joined: Sep 2012
Posts: 45
Re: T1135 Foreign Income Verificiation (New Form)
And a potentially expensive one this year.
But you are reporting it on your Canadian income tax return?
No. Your maximum cost is £289k x whatever the exchange rate was on the day you moved to Canada.
Yes, if you still owned it at December 31 then it will be the same.
Why would the gain be nil?
Your gain for Canadian tax purposes will be £344k x whatever the exchange rate was on the day you sold it (less closing costs) less £289k x whatever the exchange rate was on the day you moved to Canada. You add half of that to your taxable income for the year. 2014? That will be something around $50,000 so you will likely pay something between $10,000 and $20,000 depending on your marginal tax rate.
I don't have enough information to be sure but as long as the sale is completed before April 2015 you will probably be OK. Any UK tax you do have to pay can be deducted from the Canadian tax owing on the gain.
But you are reporting it on your Canadian income tax return?
No. Your maximum cost is £289k x whatever the exchange rate was on the day you moved to Canada.
Yes, if you still owned it at December 31 then it will be the same.
Why would the gain be nil?
Your gain for Canadian tax purposes will be £344k x whatever the exchange rate was on the day you sold it (less closing costs) less £289k x whatever the exchange rate was on the day you moved to Canada. You add half of that to your taxable income for the year. 2014? That will be something around $50,000 so you will likely pay something between $10,000 and $20,000 depending on your marginal tax rate.
I don't have enough information to be sure but as long as the sale is completed before April 2015 you will probably be OK. Any UK tax you do have to pay can be deducted from the Canadian tax owing on the gain.
I am reporting this on my Canadian taxes. But my profit on closing the sale (some time middle of July, as is its not closed yet) would be less than $100k, why should I still have to submit this?
Could I not use the money to pay some of my mortgage off in Canada, as ppl would do this in the UK when moving anyways, they are not taxed on it.
May 23rd 2014, 4:58 pm
#77
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: T1135 Foreign Income Verificiation (New Form)
I am reporting this on my Canadian taxes. But my profit on closing the sale (some time middle of July, as is its not closed yet) w ould be less than $100k, why should I still have to submit this?
Could I not use the money to pay some of my mortgage off in Canada, as ppl would do this in the UK when moving anyways, they are not taxed on it.
Could I not use the money to pay some of my mortgage off in Canada, as ppl would do this in the UK when moving anyways, they are not taxed on it.
The only foreign asset (practically speaking) over $100K in value which can be omitted from T-1135 is foreign real property for exclusively personal use. Your UK property ceased to become for personal use when you became tax resident in Canada and rented out the UK house.
Since you still owned it on Dec. 31st 2013 this year it just needs to be declared according to the procedure explained by JonboyE. It sounds like it'll be sold in the current Canadian tax year and so next year you won't have to file a T-1135 even if you keep the sub-$100k profit in the UK.
You will though be subject to CGT in Canada and perhaps also in the UK. One can be offset against the other. There is no lower threshold for CGT liability.
May 23rd 2014, 5:39 pm
#78
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: T1135 Foreign Income Verificiation (New Form)
Well in this particular case it doesn't matter because it was his principle residence prior to emigrating but where does that come from, is it a tax treaty provision?
May 23rd 2014, 5:41 pm
#79
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: T1135 Foreign Income Verificiation (New Form)
Yeah, my calculation was off slightly, I just multiplied the difference by the exchange rate but in reality he needs to work the whole thing out in Canadian dollars on each specific day and then calculate the capital gain.
May 23rd 2014, 5:44 pm
#80
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: T1135 Foreign Income Verificiation (New Form)
Mmm, anyway, the CRA tells me that (as I file on paper) they managed to once again lose my T1135 in internal mail between Winnipeg and Ottawa so they've asked me to file it again directly with Ottawa.
This super duper important form which has a huge penalty for not filing attached to it. Oops, in the bin.
This super duper important form which has a huge penalty for not filing attached to it. Oops, in the bin.
May 23rd 2014, 6:00 pm
#81
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: T1135 Foreign Income Verificiation (New Form)
Could I not use the money to pay some of my mortgage off in Canada, as ppl would do this in the UK when moving anyways, they are not taxed on it.
May 23rd 2014, 6:16 pm
#82
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: T1135 Foreign Income Verificiation (New Form)
The two have no bearing on one another. T1135 is just a form listing stuff so the CRA can work out if you're engaging in tax evasion, they just don't care about your reporting it if the total amount during the year is less than $100,000.
Capital gains are reported on T1 schedule 3, like I said, read that CRA publication I linked to, it's not just the price you sold it for minus what it was worth when you moved here, there are certain expenses like the real estate agent that can be deducted.
May 23rd 2014, 6:20 pm
#83
Binned by Muderators
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Location: White Rock BC
Posts: 11,682
May 23rd 2014, 6:30 pm
#84
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Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: T1135 Foreign Income Verificiation (New Form)
Useful bit of info, explains the design of CBSA form B4.
May 23rd 2014, 7:02 pm
#85
UCanadian
Joined: Sep 2012
Posts: 45
Re: T1135 Foreign Income Verificiation (New Form)
Thank you ever so much to all whom have replied.
Last edited by Cepheus; May 23rd 2014 at 7:18 pm.
May 23rd 2014, 7:22 pm
#86
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: T1135 Foreign Income Verificiation (New Form)
...
Since you still owned it on Dec. 31st 2013 this year it just needs to be declared according to the procedure explained by JonboyE. It sounds like it'll be sold in the current Canadian tax year and so next year you won't have to file a T-1135 even if you keep the sub-$100k profit in the UK.
Since you still owned it on Dec. 31st 2013 this year it just needs to be declared according to the procedure explained by JonboyE. It sounds like it'll be sold in the current Canadian tax year and so next year you won't have to file a T-1135 even if you keep the sub-$100k profit in the UK.
May 23rd 2014, 7:25 pm
#87
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
May 26th 2014, 10:57 pm
#89
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: T1135 Foreign Income Verificiation (New Form)
"Mom, when I grow up I wanna work for the: Canada Revenue Agency Ottawa Technology Centre Data Assessment and Evaluations Program Verification and Validation Other Programs Unit... can I?"
May 27th 2014, 2:22 am
#90
Born again atheist
Joined: Jul 2005
Location: Europe (to be specified).
Posts: 30,259
Re: T1135 Foreign Income Verificiation (New Form)
I know. What a stupid address. I had to get a bigger envelope to snail mail it in.