Form T1135 and insurance policies

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Canadian Newbie
Posts: 71
Joined: Thu Mar 12, 2015 11:59 am

Form T1135 and insurance policies

Post by Canadian Newbie »

Hi all-

I filed my T1135 for 2015 and reported the cost basis I had in a term life insurance policy held by an insurance company in the US. Going thru my records yesterday, I realized that I had a Long Term Care Insurance policy that was still in effect on 4/15/2015. I cancelled it on that date.

The instructions state you must report "insurance policies" on Form T1135. However, every website that discusses this reporting requirement only mentions life insurance policies as the type of policy that must be reported.

A long term care policy pays the expense of care in a nursing facility if your health requires you to live in a nursing facility.

Under 233.3 it does not appear that this would be considered "specified foreign property" but I am not certain if I need to amend the T1135 and report the cost basis.

Any info would be appreciated if you have dealt with this issue.
nelsona
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Post by nelsona »

Is there a problem if you report it?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Canadian Newbie
Posts: 71
Joined: Thu Mar 12, 2015 11:59 am

Post by Canadian Newbie »

[quote="nelsona"]Is there a problem if you report it?[/quote]


Thanks for responding nelsona.

I am concerned that if I file an amended T1135, it may open me up to audit or worse, penalties.
As I said, I forgot about this insurance policy when I filed the T1135 in April 2016. I would have included it if I had remembered it was still in force.
I think it may fall under 233.3(h) as property that is specified foreign property but I am not certain.
I would rather not amend the T1135 but I am concerned not doing anything about it and it gets discovered later. If it was required to be reported, I would rather amend and show I voluntarily disclosed it.
tony
Posts: 97
Joined: Tue Oct 18, 2016 8:50 pm

Post by tony »

If < 1 year, you can't use voluntary disclosure program (VDP).

I also submit this T1135 form this year, if I ammend anything will it inccur penalty of $2500?


I submit tax payer relief form, but it is rejected but until now I haven't receive any penalty of $2500 yet and my tax hasn't been ammended still showing $0 balance.
nelsona
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Post by nelsona »

I wouldn't worry about it.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Does this LTC policy have a cash value? If not, it would not be reported.

Even a term-life policy, where there is no cash value, would not need to be reported in my opinion.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Canadian Newbie
Posts: 71
Joined: Thu Mar 12, 2015 11:59 am

Post by Canadian Newbie »

[quote="nelsona"]Does this LTC policy have a cash value? If not, it would not be reported.

Even a term-life policy, where there is no cash value, would not need to be reported in my opinion.[/quote]

The LTC policy had no cash value. I canceled it in April 2015 and received nothing when it was done. I will not receive anything in the future.

I reported two Term life insurance policies on the 2015 T1135. The CRA folks advised that it was required to be reported regardless of the fact that there is no cash surrender value in the policies I own. So, I reported it based on their advice.

The sad part about this is, if I had used the simplified reporting method instead of itemizing the property, I would not have had to amend the form because the addition of this LTC policy does not bring me over the 250,000 threshold. IN the future, I will use the simplified method to avoid future hassle.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

So, since you trusted CRA telephlunkies advice last time, why did you not call them again?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
tony
Posts: 97
Joined: Tue Oct 18, 2016 8:50 pm

Post by tony »

Finally, I got a penalty of 2500 + interest due to late filing T1135.
Anyone has idea how to appeal to CRA? Any tips?

thanks
Canadian Newbie
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Joined: Thu Mar 12, 2015 11:59 am

Post by Canadian Newbie »

I was curious if you filed late or filed an amended return. In your above post it appears you were going to amend but it is not clear if amended or filed late.
tony
Posts: 97
Joined: Tue Oct 18, 2016 8:50 pm

Post by tony »

I did ammended but it was late. I will argue that I want to get relief from the penalty of 2500. But, still confused how to argue that based on the case of:
http://decision.tcc-cci.gc.ca/tcc-cci/d ... 5/index.do

If anyone knows, please let me know, I know some of them win the argument in some forum.
skoper
Posts: 38
Joined: Wed Aug 26, 2009 9:15 pm

Post by skoper »

[quote="tony"]I did ammended but it was late. I will argue that I want to get relief from the penalty of 2500. But, still confused how to argue that based on the case of:
http://decision.tcc-cci.gc.ca/tcc-cci/d ... 5/index.do

If anyone knows, please let me know, I know some of them win the argument in some forum.[/quote]

Hey Tony, how did you fare with this?
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