After much lobbying, permanent relief is finally on its way to help alleviate the burdensome reporting for clients who own foreign securities in their Canadian brokerage accounts.

As I wrote about in this space this past March, (see Relief for T1135 reporting doesn’t go far enough,, March 17, 2013), Canadians who hold “specified foreign property” at any time within a taxation year with a cost amount of more than $100,000 must provide additional information to the Canada Revenue Agency (CRA) about such holdings on Form T1135, otherwise known as the “Foreign Income Verification Statement.”

Specified foreign property includes: funds held on deposit outside of Canada; foreign investment real estate; and shares and debt of non-resident corporations. Securities held in registered accounts such as RRSPs, RRIFs, RDSPs, RESPs and TFSAs are exempt.

The penalty for failing to file this form on time is $25 a day to a maximum of $2,500, which can increase if you knowingly or under circumstances amounting to “gross negligence” in failing to file the form.

The question I posed in my previous column and, frankly, have been asking and discussing with the Department of Finance for years, was, “Why do clients need to report foreign property held in their Canadian brokerage accounts in the first place?” After all, the CRA already gets information about foreign income paid to those accounts through the T3 and T5 reporting system and it also gets information about the disposition of securities through the T5008 reporting. Surely, someone looking to evade taxes on their foreign assets wouldn’t hold them in a Canadian securities account.

Under pressure from the financial services community to further streamline the T1135 reporting process, the CRA announced changes for the 2014 taxation year in early July.

For foreign property held in an account with a Canadian registered securities dealer or Canadian trust company in 2014, taxpayers now have the option to report the total fair market value and total income on a country-by-country basis instead of the account-by-account basis that was available under the 2013 Transitional Reporting Method. (Note that the temporary T3/T5 Reporting Exception for 2013 was also eliminated for 2014.)

The total value to be reported is the highest fair market value at the end of any month during the year as well as the fair market value at yearend. The aggregate income earned (or losses suffered) in the year and the gains (or losses) realized from all dispositions during the taxation year must also be reported on this updated form.

The newest version of the form, T1135 (14), was released in July along with the new rules and includes a separate category for property held with a Canadian registered securities dealer or Canadian trust company. This version must be used for the 2014 and later taxation years if filed after July 31; however, the CRA is encouraging use of this version for all taxation years.

These changes, along with the updated T1135 form for 2014, should eliminate the need for most taxpayers to list every foreign security individually that’s held in their non-registered account(s).