Under plans announced in Finance Minister Jim Flaherty latest Budget, Canadians holding overseas property costing over CAD100,000 (USD95,220) will have to provide additional information to the Canada Revenue Agency (CRA). Starting from the 2013 taxation year, they must use a revised Foreign Income Verification Statement (Form T1135) to state which foreign institution or entity holds funds for them outside of Canada. They must additionally hand over details of the specific country to which the foreign property relates, along with information on the income generated from that property.
The CRA is keen to stress that failure to report any income from domestic or foreign sources is illegal, and that it will actively pursue cases of non-compliance. The Budget also proposed a three-year extension to the reassessment period for a tax year in cases of improper, late, or non-filing.
Launching the new T115, Parliamentary Secretary Cathy McLeod said: "The strengthened reporting requirements are just one example of the actions being taken by our Government to crack down on tax cheats. These measures are great news for hardworking Canadians who pay their fair share and bad news for those who may seek to cheat the system."
Carole Presseault, Vice President of Government and Regulatory Affairs at the Certified General Accounts Association of Canada, commented: "We are pleased to see the Government taking action on this important issue. Increased reporting requirements of large offshore assets will help to ensure that all Canadians are operating on a level playing field when it comes to their taxes. Our members support the fight against tax evasion, as it hurts all Canadians by reducing government revenue that other law abiding taxpayers are required to make up, and providing an unfair advantage to those seeking to cheat the system."
The Government is also seeking the mandatory reporting to the CRA of international electronic fund transfers over CAD10,000. This requirement will be coupled with reforms to the judicial process that will allow the CRA to obtain information from third parties, including banks. It is investing CAD30m in these, and other, initiatives.
