The Canada Revenue Agency (CRA) was asked whether a Canadian-resident individual is required to file Form T1135 (Foreign Income Verification Statement) in respect of their interest in a US pension plan.
The foreign property reporting rules are in section 233.3 of the Income Tax Act (ITA). Generally, these rules require certain taxpayers resident in Canada and certain partnerships to file an information return (Form T1135) with respect to their “specified foreign property” if the total cost amount of such property exceeds $100,000. Specified foreign property is broadly defined in ITA 233.3(1), but is subject to a number of exceptions. One of these exceptions is for an interest in a trust that is established in connection with a foreign plan that provides pension, retirement or employee benefits where the trust is exempt from income tax imposed by the country of its residence and is maintained primarily for the benefit of non-resident individuals. This exception is set out in paragraph (n) of the specified foreign property definition and paragraph (b) of the definition “exempt trust” in ITA 233.2(1).
It is the CRA’s view that the individual would not be required to file Form T1135 in respect of their interest in the plan.