Over the weekend, I completed our tax returns and printed out our T1 General to double check our returns. On the top of Page 2 there is a box that says “Please answer the following question:” followed by “Did you own or hold foreign property at any time in 2008 with a total cost of more than CAN$100,000?”. I’ve always answered “No” for this question because I assumed it meant Swiss bank accounts or a foreign rental property but out of curiosity decided to investigate further. Imagine my surprise when I found that CRA considers foreign stocks held in Canadian brokerage accounts as “foreign property”. Here’s the relevant portion from FAQs about Form T1135:
Is a taxpayer who holds U.S. stocks through Canadian brokerage houses required to file Form T1135 if the cost of such securities is more than $100,000?
Shares of non-resident corporations should be reported, regardless of whether the shares are physically held inside Canada or outside Canada and regardless of whether the shares are held by the person or through a brokerage house.
If you own foreign stocks in a taxable account and your portion of the account exceeded $100,000 in cost (not fair market value) at any point during the year, you’ll have to answer ‘Yes’ in box 266 and attach Form T1135. RRSPs are excluded from these reporting requirements as are Canadian mutual funds that hold foreign stocks. Fortunately, we are many years away from answering this question in the affirmative but I wonder how many are unaware of CRA’s definition of “foreign property” and are answering ‘No’ to this question.