CRA Offshore Asset / T1135 Non-Compliance Audit — Montreal CPA Firm Near You: Global Reporting Defense

A CRA Offshore Asset Audit (T1135 Audit) is launched when the Canada Revenue Agency identifies potential under-reporting of foreign property, bank accounts, investments, or corporate holdings exceeding $100 000 CAD.
Unlike standard income-tax reviews, these audits involve international data exchange under the OECD Common Reporting Standard (CRS) and the FATCA agreement with the U.S. Internal Revenue Service.
Mackisen CPA Montreal defends clients by reconciling offshore asset reports, preparing voluntary-disclosure submissions, and ensuring accurate compliance with CRA and Revenu Québec foreign-reporting laws.

Legal Foundation

Law: Income Tax Act s. 233.3 (T1135 Foreign Property Report); ITA s. 162(7) (penalties for non-filing); s. 231.6 (information requests).
Jurisprudence: Black v. Canada (2014 FCA) — CRA may levy $2 500 annual penalties per year for each late T1135 filed, even if no tax is owing.

Learning insight: Foreign-asset reporting is not optional once the threshold is met — non-compliance creates a paper trail that lasts decades.

Why CRA Initiates Offshore Audits

CRA’s International Compliance Division uses automated CRS and FATCA feeds to match foreign accounts to Canadian tax identities. Common triggers include:

• Foreign accounts reported by banks but missing from the T1 return.

• Investment income on T5 or T3 that originates offshore.

• Large international wire transfers or real-estate purchases abroad.

• Residency audits showing dual citizenship or foreign ties.

• Information from the OECD Exchange of Information Program.

Learning insight: CRA doesn’t discover offshore accounts by chance — they receive the data automatically from foreign banks.

CRA T1135 Audit Process

1. Information Request Letter: CRA asks for T1135 forms, bank statements, and investment proofs for the past ten years.

2. Data Matching: CRA compares foreign reports to Canadian returns.

3. Risk Assessment: If discrepancies exist, CRA extends the audit to foreign income and capital gains.

4. Penalty Application: CRA issues penalties for each year and may consider gross-negligence charges under s. 163(2).

5. Disclosure Resolution: Clients can file a Voluntary Disclosure Program (VDP) submission to remove penalties if done before CRA contact.

Learning insight: Voluntary disclosure is only available before CRA calls — once you’re contacted, it’s a case, not a correction.

Mackisen CPA Montreal’s Defense and Resolution Approach

1. Complete Asset Inventory: We trace foreign bank, investment, and real-estate records across all jurisdictions.

2. Residency Analysis: Determine if you were a Canadian resident for tax purposes in each year under review.

3. Foreign-Tax Credit Reconciliation: Match foreign income to tax paid abroad and calculate credit entitlement.

4. T1135 and Disclosure Preparation: File missing forms, amend returns, and prepare a penalty-relief package.

5. CRA Representation: We handle all communication with CRA and Revenu Québec auditors, protecting your privacy and rights.

Learning insight: The best defense is mathematical — numbers tell the truth when records are complete.

Common Errors Detected by CRA in Offshore Audits

• Under-reporting foreign bank interest or dividends.

• Failure to report rental income from U.S. or European properties.

• Incorrect currency conversion at year-end rates.

• Non-disclosure of foreign life-insurance or pension plans.

• Overseas corporate shares valued below FMV thresholds.

Learning insight: CRA cross-checks foreign T-slips against global databases; missing one year can flag the next ten.

The Financial and Legal Consequences

• $2 500 penalty per year for late or incomplete T1135.

• Additional penalties of $12 000 to $25 000 under s. 162(10)(c) for gross negligence.

• Extended audit period up to ten years.

• Possible criminal charges under ITA s. 239 if fraudulent intent is proven.

Learning insight: The cost of non-disclosure is measured not in tax owed but in credibility lost.

How Mackisen CPA Montreal Protects You

• We rebuild records from foreign banks, brokerages, and real-estate registries.

• We coordinate legal representation with cross-border tax lawyers.

• We prepare audit defense binders meeting CRA’s s. 231.6 requirements.

• We advise on amnesty or disclosure routes before CRA contact.

• We act as your communication barrier so CRA receives facts — not interpretations.

Learning insight: CRA’s international data systems see your foreign accounts — Mackisen CPA helps you control the narrative before they ask.

SEO Optimization and Learning Value

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Secondary Keywords: CRA voluntary disclosure, T1135 late filing penalty, offshore audit Montreal, foreign investment reporting, Revenu Québec global asset audit.

Learning insight: Search authority comes from trust — and so does CRA compliance. Both start with transparency and evidence.

Real Client Success

• A Montréal investor with ten unfiled T1135s avoided $25 000 in penalties after Mackisen CPA filed a full Voluntary Disclosure submission.

• A dual-resident client in France recovered double-taxed income through foreign-tax credit reconciliation.

• A corporate owner with U.S. rental properties cleared five years of back filings within 45 days and was removed from CRA’s risk database.

Learning insight: CRA audits numbers — Mackisen CPA audits truth. When truth is organized, penalties disappear.

Why Mackisen CPA Montreal

With over 35 years of combined CPA and international tax experience, Mackisen CPA Montreal defends clients facing cross-border reporting issues with CRA and Revenu Québec. Our bilingual team specializes in international asset reporting, voluntary disclosures, and audit representation for individuals, corporations, and trusts.

Learning insight: When your assets span countries, your CPA must speak laws in both languages — legal and financial.