This form is usually used for foreign bank accounts, foreign investment accounts or foreign rental properties, but can include other foreign assets. Foreign investments, including US stocks, must be reported even if held in Canadian investment accounts. Single-occupancy properties, such as a snowbird condo that does not receive rent, may be exempt.
The foreign asset disclosure applies to taxable investments, so assets held in tax-sheltered accounts such as registered retirement savings plans (RRSPs), tax-free savings accounts (TFSAs), pensions and other tax-free accounts are generally exempt.
US citizens in Canada
US citizens or green card holders must generally file US tax returns despite living in Canada. The United States is one of the few countries in the world that has this requirement for non-citizens. As a result, you may have to report both Canadian and US income, deductions, credits and foreign taxes paid.
Adding to the complexity is that certain types of income are taxed in one country but not in another, and some deductions or credits may only apply to one tax return.
Voluntary disclosure of previous years
If you have not reported foreign income or declared foreign assets in the past and should have done so, you may be able to file a voluntary disclosure with the CRA. This program would allow individual relief for taxpayers who contact the CRA to correct errors or omissions in past tax returns.
There are five conditions you must enter:
- You must submit your application voluntarily and before the CRA takes over for you or someone related to you.
- You must include all relevant information and documentation (including all returns, forms and schedules required to correct an error or omission).
- Your information involves the application or use of a possible fine.
- Your information is at least one year or one reporting period ago.
- You must file a payment of the estimated tax you owe, or request a payment plan (subject to CRA approval).
Before pursuing voluntary disclosure, you should seek professional advice. The CRA also offers a pre-disclosure chat service that is informal and non-binding, and does not require the disclosure of your identity.
Bottom line
If you are a Canadian tax resident, whether you are a citizen or not, you have worldwide income and asset disclosure requirements on your tax return. Some Canadian citizens, despite living abroad, may be considered bona fide or deemed Canadian citizens with ongoing tax filing requirements.
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