Filing form T1135 late to report out of country investments -

My question is: Canadian-specific

QUESTION: Dear Sir/Madam:

                        I trust that I am directing this query to the correct person.

My wife and I have had the same Certified General Accountant filing personal income taxes for my wife and myself for the past five years.  We have had a rental property in the U.S. for some time and along with filing the regular Personal Income Tax my accountant has submitted  a T1135 Foreign Income Verification Statement.

Last April 26th on filing our Personal Income Tax Forms our accountant gave us a our copy of the files.  Later at home upon reviewing these files my wife noted that the T1135 Foreign Income Verification Statement has not been signed by myself. She called our accountant to query this and to ask if the form had been submitted to Revenue Canada on our behalf.  The accountant  advised her that the signing of this form had been overlooked and asked that one of us come in to his office to sign the form and he would submit it to Revenue Canada.  My wife who has my Power of Attorney attended at the office of said accountant on  May 5/2006 and after signing the T1135  was advised that the form would be sent off to Rev. Canada.  However, although signed on May 5th, 2006 it appears that Form T1135 was not sent until Sept 15, 2006!  This we were not aware of until this year 2007.

We were away on from our home in December & January and upon returning and picking up our mail from Canada Post there was a Notice from Revenue Canada advising us of the late filing of Form T1135 and advising us of a late penalty of $2,500.00 plus interest of $137.40. This was the first and only notice we had received from Revenue Canada.  My wife immediately phoned our accountant to query this and was asked to send a Fax copy of Revenue Canada's Notice to his office; which she did.

In the past my wife and I have complied with all neccessary requirements for Income Tax filing and do not feel that we should be penalized for the oversight and/or neligence of our accountant and/or his staff.

Our accountant has advised us that Revenue Canada has never in past history given a penalty on the late submission of FORM T1135........and that is the first time Revenue Canada has done so.  He does not appear willing to intervene with Revenue Canada on our behalf and has suggested that we attend at the office of our local Member of Parliament and see what he can do to alleviate this matter.

My Questions to you are:
                        1.  What responsibility does our accountant have in this matter?
                        2.   Since it was our accountant who was late filing this document shouldn't he be the one to contact Revenue Canada on our behalf ?              
                        3.  What recourse is available to me to cover this loss (We are both pensioner's and $2,637.40 is a great deal of money in our financial position)
                        4  Would our accountant's errors and omissions insurance cover this fee?

I anxiously await your response and thank you in advance.


david ingram replies:

This is the first year that I have seen Revenue Canada issue a fine for form T1135 and I have only seen one. In that case, the client was clearly late by bringing his return with a refund in at the end of August as he has done for years.  I thought it patently unfair that the fine was levied and filed a request for its cancellation with the Fairness Committee.  I have not yet received a reply.  The due date for the T1135 is April 30th, even if the person is self employed and his or her return not due until June 15th.

Your accountant is correct in that this is the first year and he or she had no particular reason to think that there would be a fine.

At the same time, if you signed it clearly on May 5th, it should have been sent at that time. 


One    From the sounds of it, the T1135 went in unsigned with the original return.  Under those circumstances, I believe that the Fairness Committee would cancel the penalty.  Get your Accountant top write a request.

Two   I do not see any reference to your having filed your US 1040 and a state return if in a taxing state.  Failure to file the 1040NR can result in $10,000 penalties for failure to file PLUS 30% of the gross rent collected on a US rental property.  If you have not filed your US returns because you were losing money and someone told you that it was not required if you were losing money, you need to get that fixed right away.

That, of course, is what we do.

I have not addressed the responsibility of the accountant in this specific case because I have only one side and I still remember an inappropriate comment made by Judge Brenda Brown when she had only heard one side in a divorce case.

david ingram wrote:
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Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.
Just a guideline not etched in stone. 
This from "ask an income trusts tax and immigration expert" from or or David Ingram deals on a daily basis with expatriate tax returns with multi jurisdictional cross and trans border expatriate problems  for the United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax  Immigration Wizard Antarctica Rwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention

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