2015-0610641C6 2015 CTF Q.12 - Form T1135 - Jointly held property

Principal Issues: Where a specified foreign property is jointly owned by both spouses, who is responsible for reporting the property on T1135?

Position: We would compare each spouse’s share of the property to the $100,000 threshold, which is generally determined based on the amount contributed by each spouse.

Reasons: Law and existing CRA position.

Author: Agarwal, Lata
Section: 233.3

2015 Canadian Tax Foundation Conference
CRA Roundtable

Question 12 - Form T1135 - reporting jointly held property

How would one report, on Form T1135, specified foreign property (“SFP”) held jointly by spouses?  On this, we have 2 questions.

a)    Two spouses, Mr. A and Mrs. A, intend to purchase a SFP with a total cost of $150,000, in joint ownership. Mr. A contributes $75,000 cash and gifts $75,000 cash to Mrs. A and they jointly acquire the SFP with these funds. Assuming the couple does not hold other SFPs, can the CRA confirm how this SFP should be reported on Form T1135?

b)    Mr. and Mrs. A intend to increase their investment in the SFP to $400,000. Mr. A contributes $125,000 cash and gifts $125,000 cash to Mrs. A and they jointly acquire the SFP with these funds. Can the CRA confirm how the SFP should be reported on Form T1135?

Response

In general, if there is joint ownership of a SFP between spouses, we would compare each spouse’s share of the property to the $100,000 threshold. Each spouse’s share of the SFP is generally based on the amount contributed by each person toward the cost of the purchase of the property.

a)    In this situation, the cost amount of the SFP to each spouse is $75,000 and accordingly, neither spouse is required to file Form T1135.

b)    Since each spouse’s share of the SFP now exceeds the $100,000 threshold, each spouse is required to file Form T1135, with a cost amount of $200,000.

Prepared by,
Lata Agarwal
|2015-061064
November 24, 2015

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