Should I disclose information about my house for deemed acquisition/disposition purposes in Canada?

Question

I am in the process of migrating to Canada and I was asked to disclose my assets in my home country by my tax advisors. I do have a house there which was registered to my name from my mother's. Should I disclose this asset? What are the consequences of not disclosing it and how likely is it that Canada would find this information if I don't disclose?

Answer 1

Is this disclosure needed for immigration procedure (you have not yet lived in Canada) or you have already lived in Canada and the disclosure is related to Canadian tax? If the former, you probably want to be more specific on which category you apply and where you are in the process.

If the latter, this question probably better asked in Personal Finance & Money Stack Exchange as it has nothing to do with your immigration status: anybody with residential ties to Canada (i.e. Canadian Tax Subject) will have to disclose foreign assets which reach the value of $100,000 or more at any time in that year, regardless of immigration status. If not, and you get caught in the future, you may have to pay the greater of $24,000 or 5% of the asset value, for each year you fail to disclose. Note that income from assets will also need to be reported, even if the assets' value is less than $100,000.

As how Canadian government — or more specifically CRA — can find out, there are many ways. For one, there are now information sharing agreements with most countries. Then, even if you somehow avoid detection while owning the land as is, one day you may want to transfer its ownership or do something else with the land, which is more likely to be noticed, in which case CRA will start investigation. Note that CRA can do a lot to you from suspicion alone, especially since it is not a criminal investigation.

Please also read these articles:

1. How the CRA will uncover your offshore assets and what you should do about it
2. Questions and answers about Form T1135
3. Don’t forget foreign assets when you file your tax return
4. Common Reporting Standard Is Now Fully In Effect – If You Have Been Hiding Funds Or Assets Offshore, Now Is The Time To Disclose