CRA requires to complete and file this T1135 – Foreign Income Verification Statement if at any time in the year the total cost amount to the reporting taxpayer of all specified foreign property was more than $100,000 (Canadian dollars).
Registered accounts such as RRSP and TFSA are exempted. What about non-registered account or so-called margin account? Especially those ETFs and mutual funds invested in US stocks or bonds?
This BMO brochure page 3 has a clear answer. Canadian-listed ETFs or mutual funds invested in US equity exempt from T1135 foreign property reporting. Canadian-listed means those security traded in Canadian stock exchanges.
It also explains the foreign withholding tax vert well. It is very important to diversify investment portfolio with foreign investment since Canada has limited types of industries or sectors. Its economy highly concentrates in energy and financial which are quite cyclical. And some do not want to invest in energy sector due to concern of climate change. Since we are exposed to US’s news and culture so much, we tend to invest in US stocks. Therefore, it is key to understand foreign withholding tax. See page 1 and 2 of the same BMO brochure for details.
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