Submissions to Government

Form T1135, “Foreign Income Verification Statement”, for 2013 Taxation Year

We are writing to provide comments regarding the transitional relief that has been provided by the Canada Revenue Agency with respect to completion of Form T1135, “Foreign Income Verification Statement” for the 2013 taxation year. While we welcome the additional relief announced in February 2014, in our view, the enhanced reporting requirements of Form T1135 are still complex and will place an undue burden on a significant number of taxpayers that are clients of PMAC members.

The “2013 Transitional Reporting Method” described in the instructions on Form T1135 permits a taxpayer to report, for the 2013 taxation year, the aggregate amount of all such property rather than reporting each property separately. Further, the taxpayer is not required to determine the maximum cost of all specified foreign property during the year and may disclose the market value of such property at year end rather than cost. The 2013 Transitional Reporting Method is available to unit trusts and also to taxpayers who held specified foreign property in an account with a registered securities dealer, as defined in the Income Tax Act (Canada) (the “Act”). This relief will be helpful for taxpayers that are unit trusts as well as other taxpayers who hold all their investments at registered securities dealers as market value information at year end is usually available from the securities dealers. However, a significant number of clients that PMAC members advise hold their securities in segregated accounts at financial institutions that are not registered securities dealers. The current transitional relief creates an unfair bias against these accounts compared to taxpayers that hold their securities indirectly through a unit trust or at a registered securities dealer.

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