Owning property or working in the US can come with its own hurdles and complications. You need a keen understanding of business and financial matters across both borders to succeed in your endeavours.
HSM Chartered Professional Accountants provides exceptional cross border tax services in the Markham region. We work with individuals and corporations to keep their businesses running smoothly and maintain good financial standings. That includes organizing your cross-border assets.
As an experienced team of chartered accountants, we have the knowledge to help you be informed of cross border taxation and the services we offer to assist you. Here are some things to keep in mind about them.
The T1135 Tax Form
When own foreign investment properties worth more than $100,000 at any point during the year, you need to complete and file Form T1135 with your income tax return. Individuals, corporations, partnerships, and trusts need to fill in this form if they own this amount of foreign investment property.
There are some stiff penalties if you forget to file this form. Even if an accountant is doing your taxes, you are still responsible for ensuring this form is filled out and sent to the CRA.
You must complete Form T1135 for any taxation year that you have foreign properties. If you forget to file this, you may be able to claim a Voluntary Disclosure to avoid paying any stiff penalties. If you are doing this, make sure you include Form T1135 along with the VD form, from any previous year you may have forgotten.
In recent years, some changes to the form include a two-tier structure that allows taxpayers who held foreign property with a total cost of more than $100,000, but less than $250,000, to check boxes in Part A of the form rather than describe each type of property in detail. Part B of the T1135 will still apply to taxpayers who held specified foreign property over $250,000.
Foreign Investment Property
Some things to keep in mind as you deal with cross border taxation are Foreign investment Property and Transfer Pricing. These factors can have varying effects on what you make financially.
Foreign Investment Property applies to any money you hold in foreign bank accounts, shares from foreign investments of different companies, interest in non-resident trusts, and bonds and debentures acquired from foreign governments.
Transfer Pricing
Companies or individuals that work for American or multinational companies can have tax authorities fight for whatever you made. This is where transfer pricing comes in.
Transfer pricing describes the pricing of transactions that take place between related companies in different countries. It also applies to Canadian companies with no more than a taxable presence in other countries. Companies will also be required to make sure that the taxable profit in each country is just the same as it would be if the companies were independent.
Filing Your T1135 Form
The good news for many is that the T1135 form can be filed electronically for your ease and convenience. By filing electronically, you will receive a confirmation number to tell you that the CRA has received your form. If you receive a confirmation number, please keep it for your records.
The online version of the form contains several features to ensure data integrity. Schedules attached to the form do not have these features. For this reason, the CRA requests that you complete the T1135 prescribed form. If you need more space, attach a schedule to the prescribed form. The schedule must be in the identical format as the tables on Form T1135. The CRA will not accept other methods of providing the required T1135 information.
How HSM Can Help You
HSM can help you prepare to file basic personal and corporate tax returns, basic tax planning, and structuring of operations and transactions. Our approach is tailored towards your unique financial needs and high-quality service to assist you in gaining a financial advantage.
Our goal is to empower small and medium-sized business owners to secure their financial future. With our team of advisors and experience in taxation, accounting, auditing, and consulting, you can trust us to provide all the resources necessary to make the right decisions for your business.
Book an appointment and find out more about our services.
