Hi, my client moved to Canada a couple of year back on. He is asking below question.
“I transferred significant cash (more than $100,000) when immigrating to Canada from UAE. I used most of it making down-payment for my home but I am still left with some which is more than $100,000. Just want to clarify that the money I brought was pure savings before becoming permanent resident. Do I have to disclose this anywhere? Are there any tax implications on the money I already transferred and the remaining amount that I want to transfer in near future.”
Might be best to ask an immigration lawyer if there are any restrictions, but typically no - in Canada we pay tax on “income” not on “money in possession”. So, if you immigrated early in the year, and you are considered “resident” in Canada, you will have to pay tax on your world-wide income/earnings.
" but I am still left with some which is more than $100,000." “Are there any tax implications on the money I already transferred and the remaining amount that I want to transfer in near future.”
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So this taxpayer immigrated to Canada “a couple of year back” and retained over C$100,000 funds in a foreign country (UAE).
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There are quite a number of postings on this board which decisively prove that “Cheap is (very) Expensive”, and this is another one of them.
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Ideally, this taxpayer should have retained a CPA for (at least) his tax preparation in his year of immigration, in order to assist him in keeping him on the right side of tax law.
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As it is, he has now apparently failed to file his T1135 for prior years, and therefore, if this is the case, will be assessed a penalty of $2,500 on each late one, plus interest.
In addition, he may or may not have failed to report income earned on those foreign funds on his Canadian T1 in those prior years. If not previously reported, his prior year tax returns will need to be reassessed.
Luckily, with the 2019 tax return, he still has some 8 days or so to file his T1135 for the 2019 tax year, so he will be able to avoid an additional penalty if filed correctly.
Joe, I believe you may be jumping to conclusionsabout the T1135 for the current and prior years. You are reading between the lines here since there is nothing in the post to indicate that they weren’t filed. Are you sure that he didn’t in fact retain a CPA several years ago?
“You are reading between the lines here since there is nothing in the post to indicate that they weren’t filed.”
EXCUSE me…?
The entire question would not have been necessary to be posted if they were filed, since that is the whole question. “Are there any tax implications on the money I already transferred and the remaining amount that I want to transfer in near future.”. “I am still left with some which is more than $100,000.”
I believe you may be jumping to conclusions that I didnt read the question…
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“Are you sure that he didn’t in fact retain a CPA several years ago?”
If he did, and it wasn’t filed, I would be very glad that I was not that CPA now sitting there, potentially waiting to be sued…
Thank you for your responses. Few points to further clarify:
This is a new client for me so I am not sure if CPA was involved before.
Although I am a CPA, I believe there are many tax professionals with a lot more tax knowledge compared to a regular CPA.
This client did not file T1135 before. He came to Canada few years back and intents to bring his savings to Canada as early as possible. From my experience, CRA is very relaxed with new immigrants who are bringing savings within few years of immigration
That was not the problem you said in your post that your client had asked you.
You said that your clients problem was: "… and the remaining amount that I want to transfer in near future .” . “I am still left with some which is more than $100,000 .”
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I am glad that in your view you believe that several penalties of OVER $2,500 EACH is “relaxed” - (not to mention plus potential additional penalties for undeclared income) - IMHO your client is very unlikely to share your view of that…
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. “Although I am a CPA, I believe there are many tax professionals with a lot more tax knowledge compared to a regular CPA.”
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???
A “regular CPA.” is not permitted to be in practice acting like a “tax professional” offering those services to the Public unless he/she actually was one, and actually had substantial tax knowledge.
The words “professional misconduct” would come to mind…
@owais.ahmed
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It seems that you are now unfortunately likely in the position of having to prepare all of the the arrear year’s T1135s, and the current year one, and advise him that he will be required to file one for 2020 tax year in due course as well, and if he refuses to sign and submit, have to withdraw from the engagement.
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Before going any further, you should verify if the situation Joe mentions is the actual scenario. Were the T1135 filed in prior years? You need the answer to that question.
The Voluntary Disclosures Program
[RC199] may be available if certain conditions are met. Taxpayers who have provided incomplete information, omitted information, or who have not filed Form T1135 are encouraged to come forward and correct their tax affairs through the program. To qualify for the program, a taxpayer must file a valid disclosure.
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