Hi Everyone;
Got a question, a client received an inheritance overseas, but waiting for it to be finalized, kind of like the probate here, when would he be deemed to have owned the property? I am trying to find reference to back it up, he might have to file the T1135. Thanks
“Got a question, a client received an inheritance overseas, but waiting for it to be finalized, kind of like the probate here, when would he be deemed to have owned the property? I am trying to find reference to back it up, he might have to file the T1135.”
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Write your client a letter so you have it in writing.
Attach a copy of your Engagement letter with the part about the responsibility of the client to give you ALL relevant documentation circled in red.
Carefully and clearly explain that his FAILURE to get the documentation from the Executor outlining the current ownership of the property is not your fault, and that you are pointing out clearly in writing that his subsequent FAILURE to properly report a T1135 on time (including assets and income), if needed, could cost him $2,500 or more, so you strongly advise him to communicate immediately with the Executor.
Make sure that he acknowledges receipt of your letter.
You may wish to add that you will withdraw from the engagement rather than prepare a return on a “guess-guess” basis.
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S233.3(1) contains the definitions of Specified Foreign Property.
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Inherited property is likely cost base of zero, but you will need paperwork to confirm
Dan Chun, CPA, CGA
Partner, Business Advisor
DIRECT 778.313.1703
PH. 250.763.8919
TOLL FREE 1.877.766.9735
1500 - 1700 Dickson Avenue
Kelowna, BC
V1Y 9X1
dan.chun@mnp.ca
mnp.ca
Client File Upload
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Thanks Dan, the letter from the lawyer, in the foreign country, indicated the property was converted to Cash in the estate, as instructed by my client, so that’s where I got concerned.
There are few beneficiaries, only my client is Canadian, so likely a foreign trust
“Inherited property is likely cost base of zero”
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Leaving aside for the moment that “cost base” is not a defined term…
(See “cost amount” S233.1(1) and S248)
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CRA would REALLY REALLY like your suggestion…
… Today I inherit a property, (“cost base” zero), and next week I sell it for $1,000,000
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POD $1,000,000 less “cost base” $nil = Capital Gain $1,000,000 and TCG $500,000
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Tax thereon close to $250,000
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Duh, what Joe is trying to say is that my suggestion is not correct lol. I could almost hear him spluttering when he read my post. Thanks for the ‘correction’ 
Cost is generally FMV on inheritance except under certain circumstance such as where automatic rollover from spouse etc.
Dan Chun, CPA, CGA
Partner, Business Advisor
DIRECT 778.313.1703
PH. 250.763.8919
TOLL FREE 1.877.766.9735
1500 - 1700 Dickson Avenue
Kelowna, BC
V1Y 9X1
dan.chun@mnp.ca
mnp.ca
Client File Upload
|
|
- | - |
This email and any accompanying attachments contain confidential information intended only for the individual or entity named above. Any dissemination or action taken in reliance on this email or attachments by anyone other than the intended recipient is strictly prohibited. If you believe you have received this message in error, please delete it and contact the sender by return email. In compliance with Canada’s Anti-spam legislation (CASL), if you do not wish to receive further electronic communications from MNP, please reply to this email with “REMOVE ME” in the subject line.