Now's the time to get in touch to start planning for RRSP contributions and laying the framework for a smooth tax season. Here are two particular areas of interest with respect to this year's taxes:
Foreign Property Holdings
Are you required to file form T1135 – Foreign Income Verification Statement?
Two of the most frequent scenarios we are asked about are ownership of a foreign-owned vacation home – ie. the condo in Florida – and securities held in an account with a Canadian registered securities dealer. Firstly to qualify, this form is required only if the total cost of all of your foreign investments exceeds $100,000 Cdn. If you have a foreign investment that is used primarily for personal use (often a home in the sunny south) you are not required to file this form. On the other hand, if it is income producing, we should talk about the particulars to see if this form applies to you.
If you have an unregistered Canadian security account and you hold foreign stocks within the account, you should be aware that if the total cumulative cost of these foreign holdings exceeds the $100,000 Cdn threshold, CRA requires you to file a T1135.
Given that this form is purely an information return submitted to Canada, penalties on failure to file this form are steep at $25/day up to a maximum of $2,500. If you are wondering if you may be required to file, let’s talk.
Family Income Splitting
On October 30, 2014, our government introduced the long-awaited Family Tax Cut. This new legislation is great for families with minor children. Opting for this tax savings allows income splitting between spouses of up to $50,000 and can save families up to $2,000 in income tax. We are really excited to apply this tax credit on the 2014 personal tax filings of all clients who qualify for the program. Everyone loves saving taxes!