What is the first thing to do about an undeclared foreign account?
Establish two facts before anything else. First, when the obligation began, because that sets the number of years in play and each unfiled year carries exposure of its own. Second, whether the CRA has already acted, because the relief routes close once it has begun to act on the file. Nothing else you do is worth much until both are settled. In practice that means finding the account-opening date and, if you arrived here, your residency start date, then checking whether any letter, query or audit has already landed. With those in hand the route becomes a decision you can take on facts rather than on nerves, which is the whole object of starting properly.
Should I close the offshore account before sorting out the tax?
Closing it does not undo the years in which it went unreported, and it makes the catch-up harder, because the work needs statements for the whole period and a closed account is far slower to extract records from than a live one. If an enquiry has already opened, closure also reads as a response to it rather than a tidy-up. Deal with the reporting first, then decide what you want to hold and where on ordinary commercial grounds. If the account has to close for reasons of its own, download the complete statement history and the closing confirmation before it goes, because that history is the evidence the entire file rests on.
Am I too late to come forward if the CRA has already written to me?
The route changes, and you should treat that letter as the deadline it is. Relief available before the CRA acts is not available afterwards. That does not mean nothing can be done; it means the work moves from making a disclosure to answering a query, and relief becomes an argument on your facts rather than a programme you qualify for. Either way the underlying job is identical: the years, the income, the holdings, the documents. What matters most is not answering with a partial account of the position. Establish the full scope first and reply once, completely, because a correction to your own correction is the weakest of the three positions.
How do I work out when my reporting obligation actually began?
Two dates decide it: when you became resident in Canada, and when the holding came into existence or grew large enough to be reportable. Someone who has always lived here dates the obligation from the account. A newcomer's obligation generally begins with residency rather than with the account's own history, and the first year of residency carries a further wrinkle of its own. Work it out from documents, not from memory, using landing papers, the account-opening record and statements showing the balance at each year end. The earliest year in the set determines everything downstream, including the volume of work and how the failure itself is characterised.
Does the tax I already paid abroad reduce what I owe here?
Usually it does, and it is worth establishing early because it changes what the catch-up is actually about. Where the other country has withheld or assessed tax on the same income, Canadian relief for foreign tax paid reduces the Canadian tax on that income, sometimes to nothing at all. What it does not reduce is the exposure on an unfiled information return, which attaches to the holding rather than to the tax. That asymmetry is what these files usually turn on: little or no tax owing, and real exposure on the forms. Gather the foreign withholding certificates and assessments alongside the statements, since they support both the relief and the account of how the failure arose.
What records do I need before anyone can advise me properly?
Statements for every year from the account opening or from your arrival here, whichever is later, showing the year-end balance and the income credited. The account-opening documents, which establish whose money it is and when. Anything the foreign institution issued about tax withheld. If you are a newcomer, the documents fixing your residency start date. For investments held through the account, the acquisition cost in the original currency. Do not start filing on a partial set. The scope decision rests on the earliest year, and a disclosure that has to be widened later because a box of older statements turned up is materially weaker than one that was right the first time.
Who has to file an FBAR?
A US person whose foreign financial accounts, added together, exceed the reporting threshold at any point in the year — measured on the aggregate high balance, not on year-end value, and not on income. It captures accounts you merely have signature authority over, so business and family accounts are frequently missed. It is filed with FinCEN separately from the tax return, and its penalties are separate too. See FBAR — FinCEN 114.
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.
