Regarding the reporting obligations of a Canadian resident beneficiary of a non-resident trust that was not itself deemed resident in Canada, CRA stated:
[W]e have assumed that the only property held by the Canadian beneficiary is an interest in a non-resident trust that would not be deemed to be resident in Canada for tax purposes. Subject to certain exceptions, specified foreign property would include such an interest. The exceptions are as follows:
- an interest in a non-resident trust that was not acquired for consideration by either the person or partnership or a person related to the person or partnership; and
- an interest in a trust described in paragraphs (a) and (b) of the definition "exempt trust" in subsection 233.2(1).
As you can see, a number of situations will be exempt from filing prescribed Form T1135 because the Canadian resident will not have specified foreign property due to the fact that neither the Canadian resident nor a person related to the Canadian resident acquired the interest for consideration. On the other hand, in determining whether a Canadian resident beneficiary must complete a prescribed Form T1135 in respect of specified foreign property in a situation where the interest in the non-resident trust would be specified foreign property, it is not the value of that property that is important but rather its cost amount.