At: US holdings
Form T1135 for foreign property
You hold foreign property and have never filed Form T1135.
What we do
Canadian foreign reporting: Form T1135 for foreign property and Form T1134 for foreign affiliates.
Cross-Border Tax
When your life or your business crosses the Canada–US border, two tax systems look at the same income. We work out where you are resident, how the Canada–US tax treaty applies, and which Canadian returns and information forms you need, so the Canadian side is filed correctly and lines up with what is filed in the US.
Where cross-border tax comes into play across the cross-border year
The points where this service comes into play are numbered.
- Stage 1US holdingsA Canadian resident who owns US rental property, a US bank or brokerage account, or shares in a US company.1
- Stage 2Income in both countriesThe same income reported in Canada and in the US.2
- Stage 3MovingSomeone moving between Canada and the US for work, and unsure which country treats them as resident this year.3
- Stage 4Expanding into the USA Canadian corporation opening a US subsidiary or LLC.
- Stage 5Selling Canadian propertyA non-resident selling Canadian real estate or other taxable Canadian property.4
- Stage 6Filing seasonCanadian foreign reporting and US information returns on one calendar.
Numbered points are explained below.
The four points, explained
At: Income in both countries
The foreign tax credit
The same income is taxed in both countries and the foreign tax credit has not been claimed properly.
What we do
Foreign tax credit claims on the Canadian return for tax paid in the US.
At: Moving
Leaving Canada
You don’t know whether you became a non-resident of Canada when you moved, or what leaving means for your investments.
What we do
Residence analysis for the year you arrive in or leave Canada, including the treaty tie-breaker where both countries could treat you as resident. The departure-year return, including the deemed disposition of property on leaving Canada.
At: Selling Canadian property
The section 116 certificate
You are selling Canadian property as a non-resident and the buyer’s lawyer is asking for a section 116 certificate.
What we do
Non-resident sales of Canadian property: the section 116 notification and certificate request.
What the engagement includes
Request a proposal- Residence
Which country treats you as resident in the year you arrive or leave, including the treaty tie-breaker.
- Leaving Canada
The departure-year return, including the deemed disposition of property on leaving.
- Foreign reporting
Canadian reporting of foreign property and affiliates, such as Form T1135 and Form T1134.
- Foreign tax credits
Credits on the Canadian return for tax paid in the US.
- Non-residents and Canadian property
Sales and rentals by non-residents, such as the section 116 certificate, the NR6 undertaking and the section 216 return.
- Expanding into the US
How Canada treats each US entity choice, and one calendar with the Canadian and US filings side by side, such as Form 5472 for a US LLC.
- Something not listed?
Ask us. If it is Canadian tax, bookkeeping or advisory work, we will tell you plainly whether we can help.
How it runs
First conversation
We ask where you live, where you work, what you own in each country and what has been filed so far.
Residence and filing map
We set out your residence position for each year in question and list every Canadian return and form you need, with its due date.
Documents
You send the documents on our list. We go through them and come back to you with any questions.
Preparation and sign-off
We prepare the Canadian returns and forms, go through them with you, and file once you approve.
Next year
We note what changes next year, such as a treaty election to renew or a form that is now due every year.
Do I have to file Form T1135?
If you are resident in Canada and the total cost of your specified foreign property was more than $100,000 at any time in the year, yes. The test uses cost, not market value. You do not have to file it for the year you first become resident in Canada. The form is due with your return.
I left Canada. Am I still a Canadian resident for tax?
It depends on the ties you kept, such as a home, a spouse or dependants in Canada. If you keep significant ties, the CRA usually treats you as still resident. Where the US could treat you as resident too, the treaty’s tie-breaker rules decide. Form NR73 lets you ask the CRA for its opinion.
What is departure tax?
When you stop being resident in Canada, you are treated as having sold certain property at its fair market value on the day you leave, and you report any gain on your departure-year return. It is a deemed sale, so no money has to change hands for it to apply.
I am a non-resident and rent out a Canadian property. What do I file?
Your tenant or property manager must withhold 25% of the gross rent as non-resident tax and send you an NR4 slip. You can choose to file a section 216 return and pay tax on net rental income instead; with an approved Form NR6, withholding can be based on the net amount during the year.
Is a US LLC the right choice for a Canadian owner?
Not always. Canada and the US can treat the same LLC differently, and that can change how tax paid in one country is credited in the other. We compare it with the alternatives, in writing, before you form anything, so you can see what each choice means on both sides.
Should I use a US corporation, an LLC, or sell from Canada?
We compare the three for your situation and show how Canada treats each, before your US lawyer or registered agent forms anything.