Foreign property and income verification
Canadian government identify following as overseas assets, funds held outside Canada, Shares of non-resident corporation (other than foreign affiliates), indebtedness owed by non-residents, interests in non-resident trusts, real property outside Canada
Other property outside Canada and Property held in an account with a Canadian registered securities dealer or a Canadian trust company.
If a new immigrant’s overseas assets exceed CAD 100,000, they are required to file a report. New immigrants are exempt from this requirement in their first year, but must report every year thereafter. The cost of the assets is calculated based on the market value on the day the immigrant lands in Canada.
It’s worth noting that Canada does not tax the “assets” themselves (except for corporate capital tax), but rather the “income” generated from those assets.
As for the reporting time, new immigrants are not required to declare their foreign assets in the year they become Canadian tax residents; the declaration is required starting from the second year. To report foreign assets, Form T1135 must be completed.
Controlled and Non-Controlled Foreign Affiliates
To combat taxpayers transferring funds to tax havens or low-tax jurisdictions to earn passive investment income, and to ensure taxpayers pay their fair share of taxes on property income earned through ‘controlled foreign affiliates,’ the Canadian government has established regulations on ‘Foreign Accrual Property Income’ (FAPI). Canadian tax law not only requires you to report ownership of stocks in overseas affiliated companies as foreign property, but more importantly, it also requires you to pay taxes on the profits obtained by ‘controlled foreign affiliates’ (such as the BVI holding company mentioned above).
New immigrants with overseas assets exceeding 100,000 Canadian dollars need to fill out a form. New immigrants are exempt from reporting in their first year, but must declare annually thereafter. Asset costs are calculated based on the capital market price on the day of immigration landing. It’s worth noting that Canada does not tax the ‘assets’ themselves (except for corporate capital tax), but rather taxes the ‘income’ generated from these assets. Regarding the reporting time for overseas assets, new immigrants do not need to report their overseas assets in the year they become Canadian tax residents after landing; they need to report starting from the second year. To report overseas companies, form T1134 needs to be filled out.