The Canada Revenue Agency has offered taxpayers transitional relief on the new tax reporting requirements for foreign property on Form T1135.

Taxpayers who at any point in a tax year own “specified foreign property” with a total cost amount above $100,000 must file Form T1135, the Foreign Income Verification Statement.

Last summer, the CRA issued a revised version of this form, for tax years ending after June 30, 2013, that required taxpayers to provide more detailed information on their foreign property, including the names of the foreign firms and countries where offshore assets are held, the foreign income earned on those assets, and the highest cost amount of those assets during the year.

At the time, some tax practitioners argued that the new reporting requirements required by the CRA would be unnecessarily onerous and complex for taxpayers. In announcing transitional relief, the CRA says it’s looking to help taxpayers adjust to the new requirements.

For the 2013 tax year only, the CRA will permit streamlined reporting. A taxpayer who holds specified foreign property in an account with a Canadian securities dealer may now report the combined value of all such property, rather than reporting the details of each property. If a taxpayer chooses to use the transitional reporting method, the taxpayer must use it for all accounts with Canadian securities dealers.

In addition, fund unit trusts now have the option to report the combined value of all of their specified foreign property in the same manner for their 2013 tax year.

The CRA is also extending the filing deadline for Form T1135 for the 2013 tax year to July 31, 2014, for all taxpayers.

The transitional relief is “great news” for taxpayers, says Jamie Golombek, managing director of tax and estate planning with the Canadian Imperial Bank of Commerce’s wealth advisory services division. Without such relief, taxpayers would be facing “burdensome, if not impossible to comply with” tax reporting requirements.

“The bigger question is will this relief be extended beyond 2013, or in fact, made permanent,” Golombek says. “It’s unclear why it’s even necessary to report foreign securities held in a Canadian brokerage account in the first place, since the CRA gets information about foreign income and dispositions on these securities through both the T5 and T5008 reporting regimes.”