What counts as reasonable cause for a late filing?
Events, dated, with something to evidence them. The standard the statement has to satisfy is what an ordinarily prudent person would have done in the same circumstances, so the content is a narrative: what happened, in what order, and why the course taken was reasonable at the time. Illness, bereavement, a loss of records, or specific advice from a professional adviser can all support it, and each is credible only with dates and documents attached. What does not count is a description of a state of mind. Being unaware of an obligation is the conclusion, and the statement has to supply the events.
Does not knowing about the rule count as reasonable cause?
On its own, no, and it is the most common way these statements fail. An assertion that the filer did not know is a claim about knowledge, with nothing in it for the reader to test. What can carry weight is the account of how that came about: who was engaged, what they were asked, what they were told, and what questions were never put. That converts the same situation into dated events with documents behind them. The test is whether an ordinarily prudent person in those circumstances would have acted the same way, which is a question about conduct rather than awareness.
Can I say my accountant was responsible for the mistake?
Reliance on professional advice can support a reasonable-cause statement, but not as an accusation. What has to be shown is the reliance itself: that a competent adviser was engaged, that they were given the facts they needed, and that the filer acted on what they were told. Engagement letters, questionnaires and correspondence are the evidence. Where the record shows the adviser was never told something material, the reliance argument weakens sharply and the statement is better built on other ground. The distinction being tested is between a filer who relied reasonably and one who left a question unasked.
What documents should I attach to a penalty relief request?
Whatever fixes the chronology. Medical records or a death certificate for the period asserted, correspondence showing what an adviser was asked and told, engagement terms, an insurer's or a firm's letter for a loss of records, and the material that establishes the date the error was discovered. Then the evidence of what happened next, because prompt correction after discovery is part of what makes the account persuasive. A statement whose assertions each point to an attached document is a different submission from one that asks to be believed, and that difference decides most of them.
Why was my penalty relief request refused?
The usual reason is that it asserted rather than evidenced. Statements that describe circumstances in general terms, such as a difficult year, an oversight, or unfamiliarity with the requirement, give the reader nothing to verify, and generic assertions are the most common cause of failure. Three things are worth checking in a refused request before it is put again: whether each cause is tied to specific dates, whether documents were attached to support them, and whether the account showed what was done once the error came to light. A refusal on a thin statement is not a ruling on the underlying facts.
Does fixing the mistake quickly help my case?
It is one of the elements the statement is built on. An account that shows the error being corrected promptly once it was discovered is consistent with a filer who acted reasonably. A long unexplained gap between discovery and correction undercuts everything else in the submission, however good the original cause was. So two dates matter and both need evidence: when the error came to light, and when the correction was made. Where the gap is real and has its own explanation, such as records to obtain or an adviser to engage, that explanation belongs in the statement too.
What is T1135 and who files it?
The T1135 is Canada's foreign income verification statement, filed by a resident whose specified foreign property exceeds the reporting threshold measured on cost, not market value. It is an information return, so it is required on the facts whether or not the property produced income or tax. Its penalties run per year and are not proportionate to tax owing, which is why missed years are dealt with as a package rather than one at a time. See T1135.
What is a PFIC, and why do Canadian mutual funds cause trouble for US persons?
A passive foreign investment company is a non-US company that is mostly passive by income or by assets — which describes almost every Canadian mutual fund and ETF. For a US owner the default regime taxes distributions and gains punitively with an interest charge for the years the value built up. Two elections fix it, and both need annual information the fund may not produce for you. Holding the same exposure through US-domiciled funds usually avoids the problem entirely. See PFICs and Canadian mutual funds.
