Reporting foreign income and property

Reporting foreign income and property

If the trust is resident in Canada or deemed to be resident in Canada, you have to report its income from all sources, both inside and outside Canada. Report, in Canadian dollars, foreign income and other foreign currency amounts (such as expenses and foreign taxes paid).

If a resident trust or a deemed resident trust conducts business with a foreign affiliate, or owns specified foreign property in excess of CAN$100,000, you may have to file specific forms; see the forms listed below. For more information, call 1-800-959-8281.

Specified foreign property includes:

• funds or intangible property (patents, copyrights, etc.) situated, deposited or held outside Canada

• tangible property situated outside Canada

• a share of the capital stock of a non-resident corporation held by the trust or by an agent on the trust's behalf

• an interest in a non-resident trust that was acquired for consideration

• shares of corporations resident in Canada held by the trust or for the trust outside Canada

• an interest in a partnership that holds a specified foreign property unless the partnership is required to file Form T1135, Foreign Income Verification Statement

• an interest in, or right with respect to, an entity that is a non-resident

• a property that is convertible into, exchangeable for, or confers a right to acquire a property that is specified foreign property

• a debt owed by a non-resident, including government and corporate bonds, debentures, mortgages, and notes receivable

• precious metals, gold certificates, and futures contracts held outside Canada

• an interest in, or right to acquire, any property that is a specified foreign property

  Note
  A foreign life insurance policy may be a specified foreign property where it is described in the above list of properties.

Specified foreign property does not include any of the following:

• a property used or held exclusively in carrying on an active business

• a share of the capital stock or indebtedness of a foreign affiliate

• an interest in a trust described in paragraph (n) of the definition of "specified foreign property" in subsection 233.3(1)

• an indebtedness of an authorized foreign bank that is issued by, and payable or otherwise enforceable at, its Canadian branch

• a personal-use property as defined in section 54

• an interest in, or a right to acquire, any property that is not a specified foreign property

  Note
  Specified foreign property held in Canadian mutual funds, registered retirement savings plan (RRSP), pooled registered pension plan (PRPP), registered retirement income fund (RRIF), registered pension plan (RPP), tax free savings account (TFSA) or first home savings account (FHSA) is excluded from Form T1135 reporting requirements.

You can also find specific information on the following forms:

• Form T1134, Information Return Relating to Controlled and Non-Controlled Foreign Affiliates

• Form T1135, Foreign Income Verification Statement

• Form T1141, Information Return in Respect of Contributions to Non-Resident Trusts, Arrangements or Entities

• Form T1142, Information Return in Respect of Distributions from and Indebtedness to a Non-Resident Trust

You may be able to claim a foreign tax credit when you calculate your federal, provincial or territorial taxes. For more information, see Form T3 FFT, T3 Federal Foreign Tax Credit for Trusts, and Form T3 PFT, T3 Provincial or Territorial Foreign Tax Credit for Trusts.

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