Indebtedness on T1135 - cost
Moderator: Mark T Serbinski CA CPA
Indebtedness on T1135 - cost
Hello I lent over $100,000 cad (in USD) to a non-resident. Is the cost the USD amount multiplied by the exchange rate on the day I lent the money? How about the cost amount at year end?? Thank you!
Is the amount over $250K?
If the amount is over $100K but less than $250K, based on the new rules, my understanding is you do not need to report either the maximum cost amount or year-end cost amount. You would be able to use the Simplified Method and only need to report 1) the country it's from 2) the income you received (if applicable) and 3) the gain/loss on disposition (if applicable)
If it's more than $250K, you would need to use the Detailed Method and report 1) the country it's from 2) the income you received (if applicable), 3) the gain/loss on disposition (if applicable), 4) the maximum cost amount, and 5) the year-end cost amount.
If it’s over $250K, it's as Nelsona has outlined for the maximum cost amount and then you would need to use the Dec 31st exchange rate for the year-end cost amount.
If the amount is over $100K but less than $250K, based on the new rules, my understanding is you do not need to report either the maximum cost amount or year-end cost amount. You would be able to use the Simplified Method and only need to report 1) the country it's from 2) the income you received (if applicable) and 3) the gain/loss on disposition (if applicable)
If it's more than $250K, you would need to use the Detailed Method and report 1) the country it's from 2) the income you received (if applicable), 3) the gain/loss on disposition (if applicable), 4) the maximum cost amount, and 5) the year-end cost amount.
If it’s over $250K, it's as Nelsona has outlined for the maximum cost amount and then you would need to use the Dec 31st exchange rate for the year-end cost amount.
Just so we are clear, I believe the threshold for using the simplified method is if TOTAL foreign holdings were lees than CAD$250K for the entire year. Not just individual items.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best