The problem was that for a taxpayer with over $100,000 in foreign assets, the T1135 is due no later than the due date for the income tax return. Since the T1135 was late, penalties applied. The minimum penalty is $25 per day, up to 100 days.
Ms. Fung was therefore assessed a $2,500 penalty. She asked the CRA to waive the penalty, and the CRA refused. She then applied to the Federal Court for judicial review of the CRA’s decision.
The Court ruled that the CRA’s decision was within the “range of possible, acceptable outcomes”. The CRA could choose whether or not to waive the penalty, had considered Ms. Fung’s arguments, and its decision to not waive the penalty was not unreasonable. Her ignorance of the T1135 filing deadline was no excuse.
This case provides an important lesson about the importance of filing the T1135 on time!