Selling undeclared property and bringing money to Canada

[anigdikar]

Hi All,

I must not be alone to land in this situation, so would like to know other's opinion and expertise.

I am a Canadian PR holder living in Canada since last 3 years. Like anyone else, I have started thinking of creating real estate asset in Canada. I have a residential property in my native country which I would like to sell and bring the money to Canada.

Main problem is, I haven't declared this property while doing landing formalities in Canada. Not purposely, but it was my ignorance about the landing process.

So, as I understand, if I sell the property and transfer that money in my Canadian bank account, it will come under CRA's radar and CRA will consider that amount as my income and will deduct huge tax from it.

Is there any legal way to avoid being taxed in Canada and still bring the amount to Canada?

 

[canuck_in_uk]

Hi All,

I must not be alone to land in this situation, so would like to know other's opinion and expertise.

I am a Canadian PR holder living in Canada since last 3 years. Like anyone else, I have started thinking of creating real estate asset in Canada. I have a residential property in my native country which I would like to sell and bring the money to Canada.

Main problem is, I haven't declared this property while doing landing formalities in Canada. Not purposely, but it was my ignorance about the landing process.

So, as I understand, if I sell the property and transfer that money in my Canadian bank account, it will come under CRA's radar and CRA will consider that amount as my income and will deduct huge tax from it.

Is there any legal way to avoid being taxed in Canada and still bring the amount to Canada?

You didn't have to declare your property during your landing. However, if it meets the requirements of specified foreign property, you were required to declare it every year when filing taxes. If you failed to do that, you committed tax fraud.

If you sell the property and fail to report it to avoid paying capital gains, you will be committing tax fraud.

 

[anigdikar]

You didn't have to declare your property during your landing. However, if it meets the requirements of specified foreign property, you were required to declare it every year when filing taxes. If you failed to do that, you committed tax fraud.

If you sell the property and fail to report it to avoid paying capital gains, you will be committing tax fraud.

Thanks for your reply.

I have filed 3 income tax returns till now, but I was on Work Permit that time. This year will be my first income tax return after getting my PR. Does it matter?

If not, then is there way to correct previous years Tax returns?

 

[canuck_in_uk]

Thanks for your reply.

I have filed 3 income tax returns till now, but I was on Work Permit that time. This year will be my first income tax return after getting my PR. Does it matter?

If not, then is there way to correct previous years Tax returns?

No, it doesn't matter.

Contact CRA.

 

[torontosm]

Thanks for your reply.

I have filed 3 income tax returns till now, but I was on Work Permit that time. This year will be my first income tax return after getting my PR. Does it matter?

If not, then is there way to correct previous years Tax returns?

What is the value of the property? If it is over $100,000, then you should have filed it in your income tax returns. Otherwise, it will be very difficult for you to bring those funds to Canada.

 

[prash42]

Thanks for your reply.

I have filed 3 income tax returns till now, but I was on Work Permit that time. This year will be my first income tax return after getting my PR. Does it matter?

If not, then is there way to correct previous years Tax returns?

CRA's definition of being a tax resident is completely different from being a PR under immigration law. You are a tax resident, since you worked in Canada, and filed tax returns. As a Canadian tax resident, you are taxable on your global income (even if you are not a PR). However, there is no need to correct past income tax returns, UNLESS you had investment / other income outside Canada.

CRA however requires a separate filing called the T1135 form. This has to be filed annually with CRA, and it is NOT the same as an income tax return.
https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1135.html

In this you have to list all foreign property / investments whether or not you earned income from them. You are exempt from filing T1135 if the total combined cost of your foreign property + investment is less than $100,000. Note that the measurement is based on tax "cost", which is usually the market value on the day you first entered Canada to work, NOT today's market value. If the total cost is between $100,000 and $250,000, the T1135 filing is simplified. If it is more than $250,000, the T1135 filing is very detailed. Not filing T1135 is a serious offence. Voluntary delayed filing is generally viewed more favorably, than CRA discovering it on their own.

DISCLAIMER: I am not a tax advisor / lawyer. Only sharing my understanding.