2015-0611141E5 T1135 reporting - former resident of Canada

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Where a former individual resident of Canada returns to Canada part-way in a taxation year, what is the taxpayer’s reporting period in respect of Form T1135?

Position: In the situation described, where a former resident of Canada returns to Canada part-way in the year, the individual’s reporting period would be for the individual’s taxation year, defined as the calendar year in subsection 249(1) of the Act.

Reasons: The reporting period in subsection 233.3(3) of the Act refers to a reporting entity’s taxation year or fiscal period.

Author: Skulski, Katharine
Section: 233.3, 233.7, and 248(1)

XXXXXXXXXX                                                                                                          2015-061114
                                                                                                                                  Katharine Skulski

July 11, 2016

Dear Ms. XXXXXXXXXX

Re:  Form T1135 reporting – former resident of Canada

We are writing in response to your email dated February 17, 2015 and our telephone conversation (XXXXXXXXXX/Skulski) of September 29, 2015 in which you asked for our views on the reporting period of a former resident of Canada who immigrates to Canada part way through a taxation year.  We apologize for the delay in responding.

You have described a hypothetical situation in which an individual former resident of Canada (the “Taxpayer”) immigrates to Canada on July 1, 2014.  The Taxpayer owned specified foreign property throughout the year (including the time of immigration) consisting of shares of non-resident corporations (that are not foreign affiliates) with a total cost amount of $500,000. In addition, during 2014, but prior to the date of immigration, the Taxpayer acquired and disposed of another property that was specified foreign property.

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (“Act”), where referenced.  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Pursuant to subsection 233.3(3) of the Act, a reporting entity for a taxation year or fiscal period, is required to file a return for the year or period in prescribed form on or before the entity’s filing-due date for the year.  A reporting entity for a taxation year or fiscal period is defined in subsection 233.3(1) of the Act as a “specified Canadian entity” for the year or period where at any time in the year or period, other than a time when the entity is non-resident, the total cost amount to the entity of specified foreign property exceeds $100,000. A specified Canadian entity for a taxation year is defined in subsection 233.3(1) of the Act to include a taxpayer resident in Canada in the year.

The reporting period under subsection 233.3(3) of the Act applies with respect to the reporting entity’s taxation year, which is defined in subsection 249(1) of the Act.  In particular, paragraph 249(1)(c) of the Act provides that for an individual, the taxation year is the calendar year.  Although the determination of whether a particular specified Canadian entity is a reporting entity excludes the time the entity is non-resident, such exclusion does not extend to the reporting entity’s reporting period.  In the situation that you have described, where the Taxpayer has established that he or she is a reporting entity for a taxation year, the Taxpayer would file the return in prescribed form (i.e., Form T1135) in respect of his or her specified foreign property for the taxation year.

We trust that these comments will be of assistance.

Yours truly,

 

Bob Naufal
Manager
Administrative Law Section
International Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

cc. Steve Shalaby, Acting Manager, Aggressive Tax Planning Policy Section

All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without the prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5.

© Her Majesty the Queen in Right of Canada, 2016

Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistribuer de l'information, sous quelque forme ou par quelque moyen que ce soit, de façon électronique, mécanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

© Sa Majesté la Reine du Chef du Canada, 2016


Video Tax News is a proud commercial publisher of Canada Revenue Agency's Technical Interpretations. To support you, our valued clients and your network of entrepreneurial, small businesses, we choose to offer this valuable resource to Canadian tax professionals free of charge.

For additional commentary on Technical Interpretations, court cases, government releases, and conference materials in a single practical document specifically geared toward owner-managed businesses see the Video Tax News Monthly Tax Update newsletter. This effective summary and flagging tool is the most efficient way to ensure that you, your firm, and your clients are fully supported and armed for whatever challenges are thrown your way. Packages start at $400/year.