T1135 Foreign Income Verification Statement Case Studies
6 worked T1135 Foreign Income Verification Statement case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to t1135 foreign income verification statement work, not a specific client's file.
Case Study 1 · Objection and relief
Notice Of Objection Allowed In Full, $126,000 Reversed — US Retirement Account Holder, Halifax
Client: A dual citizen with a US retirement account · Where: Halifax, Nova Scotia · Engagement: 8 weeks, fixed fee
Amount reversed$126,000
ObjectionAllowed in full
Account balanceNil
The situation — A dual citizen with a US retirement account, Halifax, Nova Scotia
A dual citizen with a US retirement account in Halifax, Nova Scotia had been reassessed for $126,000. 9 days were left on the objection deadline. The reassessment rested on winters spent in the United States with the day count kept casually and no residency position documented anywhere.
What we did for A dual citizen with a US retirement account, Halifax, Nova Scotia
We filed the objection inside the deadline with a complete submission rather than a placeholder. Alongside it, we aligned the Canadian and US reporting of the same income so the foreign tax credit claim carried support on both returns.
The result — A dual citizen with a US retirement account, Halifax, Nova Scotia
The appeals officer allowed the objection in full. $126,000 was reversed and the account returned to a nil balance.
Case Study 2 · Sale and succession
Intergenerational Transfer Completed With $800,000 Deferred — Arizona Snowbird, Moncton
Client: A snowbird spending winters in Arizona · Where: Moncton, New Brunswick · Engagement: 6 weeks, fixed fee
Tax deferred$800,000
TransferCompleted
RecordsReview-ready
The situation — A snowbird spending winters in Arizona, Moncton, New Brunswick
A generational transfer at a snowbird spending winters in Arizona in Moncton, New Brunswick had been discussed for years without a plan. A shareholder loan balance that would have been picked up as income on closing meant the transfer as contemplated would have been fully taxable.
What we did for A snowbird spending winters in Arizona, Moncton, New Brunswick
We applied the treaty rate to the dividend withholding, filed the NR4 return, and remitted the shortfall before the CRA assessed the payer for it. We sequenced the steps so each one was complete and documented before the next depended on it.
The result — A snowbird spending winters in Arizona, Moncton, New Brunswick
$800,000 of tax was deferred through the transfer, and the successor generation took over a corporation whose records stood up to review.
Case Study 3 · Cross-border exposure resolved
Foreign Reporting Brought Current, $126,000 Recovered — US Citizen in Canada, Ottawa
Client: A US citizen living in Canada · Where: Ottawa, Ontario · Engagement: 5 weeks, fixed fee
Amount recovered$126,000
Reporting statusCurrent
Annual effortHours, not weeks
The situation — A US citizen living in Canada, Ottawa, Ontario
Foreign holdings at a US citizen living in Canada in Ottawa, Ontario had passed the reporting threshold without anyone noticing. Behind the disclosure problem sat foreign accounts that had passed the $100,000 T1135 threshold three years earlier.
What we did for A US citizen living in Canada, Ottawa, Ontario
We reported the deemed disposition properly on the departure return and claimed the foreign tax credits that had been left unused. We claimed the treaty relief and foreign tax credits on the Canadian return and corrected the disclosure position for the open years.
The result — A US citizen living in Canada, Ottawa, Ontario
The treaty position was accepted and $126,000 was recovered. Reporting is now current and the annual process takes hours rather than weeks.
Case Study 4 · Scaling without breaking
Growth Handled Without A Missed Filing, $27,000 Freed — US Pension Recipient, Kitchener
Client: A Canadian resident receiving US pension income · Where: Kitchener, Ontario · Engagement: 3 weeks, fixed fee
Cash freed$27,000
Compliance failuresNone
ReportingMonthly
The situation — A Canadian resident receiving US pension income, Kitchener, Ontario
A Canadian resident receiving US pension income in Kitchener, Ontario was opening in a second province. That meant different filing obligations and a different payroll regime. US tax paid but no foreign tax credit claimed on the Canadian return already sat in the file.
What we did for A Canadian resident receiving US pension income, Kitchener, Ontario
We restructured the US holding so the Canadian and US characterisations aligned, ending the double taxation going forward. We then put monthly reporting in place. That let the owner see the cash effect of growth while there was still time to act on it.
The result — A Canadian resident receiving US pension income, Kitchener, Ontario
Growth was absorbed without a compliance failure. $27,000 of cash was released, and the monthly reporting now flags a problem while it is still small.
Case Study 5 · Records and systems rebuilt
27 Months Reconciled And $7,500 Of Input Tax Recovered — Cross-Border Contractor, Calgary
Client: A contractor working on both sides of the border · Where: Calgary, Alberta · Engagement: 10 weeks, fixed fee
Months reconciled27
Input tax recovered$7,500
Close time9 days
The situation — A contractor working on both sides of the border, Calgary, Alberta
Nothing reconciled at a contractor working on both sides of the border in Calgary, Alberta. Every filing started with 27 months of cleanup. The file was carrying a US LLC taxed as a corporation in Canada, producing double tax on the same income.
What we did for A contractor working on both sides of the border, Calgary, Alberta
We rebuilt from source rather than correcting on top of the existing file. We filed the outstanding T1135 disclosures through the Voluntary Disclosures Program, which eliminated the penalty exposure entirely. Then we set the routine that keeps it clean.
The result — A contractor working on both sides of the border, Calgary, Alberta
27 months reconciled to the bank. The close now takes 9 days, and $7,500 of previously unclaimable input tax was recovered in the process.
Case Study 6 · Structure rebuilt
Holding Structure Added, $35,000 Saved Annually — US LLC Shareholder, London
Client: A shareholder of a US LLC · Where: London, Ontario · Engagement: 4 weeks, fixed fee
Annual saving$35,000
ReorganisationTax-neutral
StructureMatches operations
The situation — A shareholder of a US LLC, London, Ontario
The structure at a shareholder of a US LLC in London, Ontario needed fixing. The file was carrying invoices paid to a non-resident consultant working on site in Canada with no Regulation 105 withholding taken. Every option for fixing it ran through a reorganisation that had to be done without triggering tax.
What we did for A shareholder of a US LLC, London, Ontario
We worked with the client's lawyer. Together, we reconstructed the day count on both sides of the border and documented the residency and treaty position before either revenue authority asked. We also prepared the elections, resolutions and valuations the structure needed to stand up.
The result — A shareholder of a US LLC, London, Ontario
The structure now matches the business. Annual saving of $35,000, and the reorganisation itself was tax-neutral.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
