SADOVNICK MORGAN LLP CHARTERED PROFESSIONAL ACCOUNTANTS

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1 SADOVNICK MORGAN LLP WELCOME TO TAX SEASON! Please find enclosed the following documents to help with your 2017 tax year preparation. Individual copies of the documents can be downloaded at Our ever popular Tax Organizer to help you answer basic questions and remind yourself of key documents to include. Enclosure Letter summarizing changes in personal taxes for 2017 as well as various important reminders. Engagement Letter(s) for signing. We need this form for each taxpayer in order to work on the tax return. THIS MUST BE SIGNED AND SENT BACK TO US! T1135 Foreign Income Verification Statement letter summarizing the rules for CRA disclosures of foreign assets. This is important if you have more than $100,000 in non- Canadian investments. An Estate Planning information document which provides us with a valuable understanding of who your key advisors are as well as where important documents are related to your estate. If you are a Sole Proprietor (which means you are running an unincorporated business) be sure to download our excel worksheet. If you are a US Tax Filer, be sure to download our US Tax Filer Package To book an appointment with Arnie Please call him at or arnie@smllp.ca Peter Please call him at or peter@opeterskov.com Michael Please call him at or x 6382, or him at michael@smllp.ca or book online by visiting Lucy Please call her at or lucy@smllp.ca Vancouver Address (Drop off or Mail) Suite Granville St. Vancouver, BC V6C 3P1 Edmonton Address (Mailing address) Box 312, th St., Edmonton, AB, T5T 4J5 Send Documents Electronically Suite Granville Street Vancouver, BC Tel: Box 312, th Street Edmonton, AB T5T 4J5 Tel/Fax:

2 SADOVNICK MORGAN LLP TAX ORGANIZER USE THIS ENVELOPE FOR YOUR PERSONAL TAX PAPERS Name: S.I.N.: Date of Birth: Address: SMLLP Contact: Spouse: S.I.N.: Date of Birth: Tel Home: Cell: How do you want to receive the final returns? (please check) Electronic Mail Pick-Up Is this package complete? If no, explain below: Yes Do you have dependents? Yes If yes, please provide their names, gender, dates of birth and Social Insurance Number under Other Information on the back. Did you move, have children or change marital status? Please enclose details..... Yes Would you like to sign up for direct deposit? (Please provide a void cheque)..... Yes Do you want your contact information released to Elections Canada?. Yes Did you own during the year non-canadian investments with a cumulative cost of $100,000?... Yes Have you spent 120 days (or part of) in the United States in any of the last three years... Yes Did you sell a principal residence during the year?.... Yes What will your legacy be? PLANNING YOUR LEGACY Planning your legacy starts with identifying what legacy you wish to leave for the next generation. The legacy plan often starts with your personal values and thinking about how you wish to be remembered. The next stage is to develop an estate plan by arranging your wealth during your lifetime in a way that minimizes both income taxes and estate administration fees on death. A successful plan will ensure not only sufficient liquidity to pay those costs but will also help you pass on your values, your wealth and your legacy. Family enterprises have unique issues requiring specific skill sets. At SADOVNICK MORGAN LLP we are specifically trained in family governance, business strategy and family dynamics issues which help us work with a multi-disciplinary team to develop business continuity plans for our clients. Here are some other things you need to consider: Planning your legacy and estate is much more than just writing a Will, it can involve estate freezes, the establishment of family trusts, philanthropy, asset protection, income splitting and the use of life insurance to fund any tax liability or a buy-out on death. Good planning also considers how you are going to fund costs associated with retirement while still putting money aside for the next generation; Planning your legacy is an ongoing process. Income taxes and other laws are constantly changing, so are your personal circumstances. Your plan should be reviewed by tax and other related professionals on a regular basis; Philanthropy can be an important part of your legacy and estate plan. Ask us how; and It is never too early to start. Unexpected events do occur. By failing to make a plan you put your family at the risk of having little or no control over the major decisions affecting them; At SADOVNICK MORGAN LLP, we can help develop a plan for inter-generational transfers, wealth preservation and legacy. US CITIZENS, RESIDENTS, GREEN CARDHOLDERS OR OTHER US PERSONS US persons are generally required to file a US federal tax return and may be required to file a state tax return. The filing deadline for state and federal taxes could be April 15 th and/or June 15 th unless extensions are filed. US persons or residents must disclose their foreign accounts to the Internal Revenue Service and/or US Treasury: 1. Form 8938 is required if you have specified foreign financial assets in a non-us bank with a value of at least $200,000 at December 31 or more than $300,000 at any time during the year. (Due with 1040 tax return). 2. Form FINCEN 114 ( FBAR ) is required if you had a financial interest in or a signatory authority in non-us accounts which on aggregate have a balance of greater than $10,000 USD at any time during the year. (Due April 15 th with extension to October 15 th ). 3. Form 3520 and 3520-A are required if you have a TFSA, RESP or other trust interest. (Due with 1040 tax return). 4. Form 5471 may be required if you had more than 10% of the value or voting power of a non-us corporation. (Due with 1040 tax return). If you received capital dividends during the year, these may be taxable in the USA. Please enclose the details. Suite 601, 570 Granville Street, Vancouver, BC V6C 3P1 Tel: Fax: Box 312, th Street, Edmonton, AB T5T 4J5 Tel:

3 INDIVIDUAL INCOME TAX RETURN CHECKLIST Information slips for the following income: Documents for the following transactions: Employment... (T4)... [ ] Real estate sales or purchases.. [ ] Pension/Grant/Other Income... (T4A)... [ ] Stocks/bonds/mutual funds. [ ] CPP/Old Age Security... (T4A(P)) (T4A(OAS)) [ ] Commodity transactions/cryptocurrencies... [ ] Employment Insurance... (T4E)... [ ] Tax shelters... [ ] Dividends/Interest w / reports... (T5)... [ ] Personal property.. [ ] RRSP, DPSP, RPP, RRIF... (T4RSP/RIF).. [ ] Student loan interest paid.. [ ] Estates/Trusts/Mutual Funds w / reports... (T3) [ ] HBP/LLP RRSP withdrawals.. [ ] Partnerships/Tax Shelters..... (T5013/T101) [ ] Investment reporting summary from broker... [ ] Universal Child Care Benefit... (RC62)... [ ] T1135 reporting package from broker... [ ] Other Tips/Gratuities [ ] Other [ ] Receipts for the following deductions: Please provide the name and phone number of your broker RRSP contributions [ ] Charitable donations. [ ] Union/professional dues.. [ ] Provide details of: Child care expenses including T4s for a nanny... [ ] Taxable benefits not on T4.. [ ] Moving expenses.. [ ] Deductible employment expenses T2200. [ ] Accounting/legal fees [ ] Alimony/maintenance paid/received. [ ] Investment counsel fees.. [ ] Foreign income/taxes.. [ ] Interest paid on investments [ ] Rental income and expenses. [ ] Tuition fees/education deduction (T2202A, TL11A). [ ] Business/Professional income... [ ] Medical/attendant care expenses (including travel medical insurance and various items listed here: [ ] Self-employed commission income... Farming or fishing income/expenses [ ] [ ] Political donations. [ ] Record of kilometers driven for business use.. [ ] Provincial tax credits. [ ] Record of kilometers driven in total... [ ] Public transit passes. [ ] Foreign pension details.... [ ] Eligible educator school supply tax credit. [ ] Other income/deductions [ ] B.C. Seniors (age 65 or older) Home Renovation Tax Credit ( [ ] [ ] [ ] Installments made Prior year s tice of Assessment Prior year s Return Other CRA Mail Were you a first time home buyer this year? Yes Foreign Property Reporting (If Yes, please attach details or contact SMLLP) Did you, at any time during the tax year: Have any transactions with foreign affiliates, non-resident trusts or sell any foreign property? Yes Own or acquire specified foreign property with a total cost in excess of $100,000 CDN? Yes (including shares of foreign corporations held by a Canadian broker) For more information on specified foreign property please visit CRA s T1135 Q&A Page ( Documents for US Citizens, Residents, Green Cardholders or Other US Persons: Will you be e-filing your own FBAR (FINCEN 114)?...Yes Did you receive a capital dividend during the year?...yes Do you have an interest in a Trust, TFSA, RESP, Mutual Fund/ETF?...Yes Do you own shares in any private companies?...yes IRA / Roth IRA statements Capital dividends received.. TFSA account statements Annual mortgage interest statements. RRSP/RRIF statements.... Annual property tax statements RESP statements..... Healthcare coverage statement.... Other Information:

4 SADOVNICK MORGAN LLP IMPORTANT INFORMATION FOR YOUR 2017 PERSONAL INCOME TAX AND BENEFIT RETURN(S) We are commencing preparation of 2017 Personal Income Tax Returns. Personal income tax returns are due to the Canada Revenue Agency ( CRA ) on or before April 30th, n-incorporated proprietors and members of non-incorporated business partnerships have until June 15, 2018 to file their personal tax returns. However, if you have a balance owing for 2017, you still have to pay it on or before April 30th, 2018 even if you get the extension. In addition, you may have to file additional information returns in certain situations. We are pleased to assist you with the preparation of your personal income tax and benefit return(s) for the 2017 tax year. To assist you in gathering and organizing your information we have provided a Tax Organizer in this package. It is your sole responsibility for gathering the necessary information for your tax return and ensuring it is complete. We recommend that you review your prior year tax return to ensure that you have received and are providing to us all the required documents. Significant penalties may apply if income is omitted. Please include a copy of your 2016 tice of Assessment from the CRA. Let us know of any new developments or changes in your personal circumstances. We wish to bring to your attention some recent tax changes for 2017: Children s Arts Amount and the Children s Fitness Tax Credit has been eliminated. However, if any of these expenses could qualify as child care, please provide them to us. Please note that Child Care expenses include costs to have someone watch your children so that you can work. Tuition Credits for Months in School have been eliminated at the Federal level, but is continuing for some provinces, including BC and Alberta. Public Transit Tax Credit has been eliminated for any months subsequent to July Transit passes for January to June will still qualify. The top tax rate for 2017 in BC is 47.7% but in 2018 this will increase to 49.8%. The top rate in Alberta is 48%. The TFSA increase for 2018 will be $5,500. The 2017 Average Foreign Exchange Rate for US to Canadian dollars is $ We wish to bring to your attention some important reminders for 2017: Electing to Stop CPP Contributions is available if you are an employee or self employed and between 65 and 70 years old. The form CPT30 needs to be filed with your employer and the CRA. Please contact us for more information. If you have completed the form in the past, please provide us a copy. The Sale of a Principal Residence must now be reported, along with any principal residence designation. The CRA is collecting the information to aide them in enforcement programs. Capital Gains (Losses) on Foreign Currency changes in excess of $200 needs to be reported on your tax return. The gain is reportable once it is triggered by either converting to another currency or purchasing goods in the foreign currency. Tracking can be difficult, please speak to us if you have gains or losses to report. Suite Granville Street Vancouver, BC Tel: Box 312, th Street Edmonton, AB T5T 4J5 Tel/Fax: /2

5 - 2 - Cryptocurrency (Bitcoin) gains may be treated as capital gains or income depending on how involved in the market you have been. A gain/loss is recognized every time you use a coin, whether it is sold for cash or if used to purchase goods. Home accessibility expenses can be claimed up to $10,000 for eligible expenses you incurred for work done or goods acquired for an eligible dwelling. Form T1135 Foreign Income Verification Statement is required with your tax filing if at any time in the year the total cumulative cost amount of all specified foreign property (generally comprised of non- Canadian investments, including foreign stocks held at a Canadian securities dealers) you owned or held a beneficial interest in was more than $100,000 CDN. If this applies to you, you may need to file a completed T1135. The CRA has been very aggressive on assessing penalties so we wish to remind you that responsibility to sign the documents and get them back to us is yours. We cannot file your returns without the signed documents. While we may attempt to follow up with you to get the documents, the responsibility for filing on time rests with you. Make sure you file on time as the CRA has been strictly assessing penalties. It is your responsibility to sign the documents and get them back to us. We cannot file your returns without the signed documents. While we may attempt to follow up with you, the responsibility for filing on time rests with you. Are you at risk because of the amount of time you spend in the US? Both the Canadian and the United States government have been tracking how much time you spend in each country. Spending too much time in the US could result in adverse tax consequences, such as, US taxation on worldwide income, US information return filing requirements, and potentially a Canadian exit tax. The determination of whether your time in the US is considered substantial presence is determined based on a formula which factors in the number of days in the US over the last three years. United States Personal Income Tax Return Are you a US citizen, resident, green card holder or other US Person? If you answered yes, let us know and we can assist in determining your US filing obligations and preparing your US filing requirements. Our fee for the preparation of tax return(s) is based on time spent calculated at our hourly rates. In order to minimize your costs, we suggest that the information provided be organized and complete. Our minimum fee is $ plus GST. Your records may be dropped off between Monday to Friday from 8:30 am to 5:15 pm. Weekend and after-hours meetings may be arranged by appointment. We are providing an engagement letter for you (and your family). Please review the engagement letter thoroughly and return the signed and dated original letter to us with your information. We will not be preparing the return(s) until we receive a signed document. If you require additional engagement letters, please let us know. We look forward to being of service to you. If you have any questions about what is needed for your 2017 tax return, please do not hesitate to contact us. Yours truly, SADOVNICK MORGAN LLP

6 SADOVNICK MORGAN LLP IMPORTANT: THIS MUST BE SIGNED BY THE TAXPAYER BEFORE WE PREPARE THE RETURN DATE: NAME: ADDRESS: SUBJECT: 2017 CDN TAX RETURN LETTER OF ENGAGEMENT We will prepare your 2017 personal income tax return based on information that you provide to us. We will not audit or otherwise verify the data you submit, although we may ask you for clarification of some of the information. It is our responsibility to prepare your tax return correctly, in compliance with the Income Tax Act and based on the information that you have provided. It is your responsibility to provide us with all the information required to prepare complete and accurate returns. You should retain all the documents, proof of payments and other data that form the basis of your income and deductions. These may be necessary to prove the accuracy and completeness of the return to the CRA. You have the final responsibility for the income tax return(s) and therefore, you should review it carefully before you sign it. Specific assurances that you provide to us include: All business (including commission, farming, and professional incomes) and rental schedules present the results of operations and include all material transactions. All income and benefits from employment have been reported, whether or not they are on the T4 slips. All incomes from investment (whether received or not) have been reported, whether or not they are on the T3 and T5 slips. All dispositions of a capital nature (including principal residences), and their costs, have been reported. All estimates for personal use of automobile, business portion of residence, and other such estimates you have provided are reasonable and supported by usage logs and other evidence. By signing this letter, you represent that you will provide us with accurate and complete information necessary to prepare your tax return. This includes informing us of all interests you held in foreign properties with an aggregate cost in excess of $100,000 at any time in the year, as well as all income from any foreign properties regardless of their aggregate value and all income and transactions relating to non-resident trusts. We will use our judgment to resolve questions in your favor where a tax law is unclear if there is a reasonable justification for doing so. In accordance with our professional standards, we will follow whatever position you request, as long as it is consistent with the laws, regulations, and interpretations that have been promulgated. If the CRA should later contest the position taken, there may be an assessment of additional tax plus interest and penalties. Currently, the CRA and provincial taxing agencies are aggressive in assessing penalties. Suite Granville Street Vancouver, BC Tel: Box 312, th Street Edmonton, AB T5T 4J5 Tel/Fax: /2

7 -2- We assume no liability for any such additional penalties or assessments. In the event, however, that you ask us to take a tax position that in our professional judgment will not meet the applicable laws and standards as promulgated, we reserve the right to stop work and shall not be liable to you for any damages that occur as a result of ceasing to render services. Changes to applicable law or regulations or the issuance of new case or ruling authority after your tax return is prepared could adversely affect a position reported on a tax return. We have no obligation to advise you of any changes in law after we prepare your tax return. The law imposes various penalties, which are not deductible and can be significant, when taxpayers understate their tax liability, fail to report income or fail to file, on a timely basis, required forms. If you would like information on the amount or circumstances of these penalties, please contact us. You confirm that you are not aware of any illegal or possibly illegal acts for which you have not disclosed to us all facts related thereto. The CRA may select your return for review. CRA representatives will often request copies of your receipts, and sometimes they may even require a full audit. Any adjustments proposed by the CRA are subject to certain rights of appeal with the Tax Court of Canada. In the event of such tax examinations, we will be available upon request to represent you. Our business respects the privacy of personal information, that is, information that identifies you as an individual, or that is associated with such identifying information. By engaging our services, you agree to provide personal information necessary for us to meet your service requests. Before you provide us with any personal information on behalf of others, you agree that you will have obtained consent for collecting, using and disclosing this information, according to privacy legislation. To change your contact information or to let us know if there are any types of correspondence that you do not wish to receive from our office, please contact us. By signing this letter, you agree that we may retain personal information and any records containing personal information pending satisfaction of any outstanding accounts, even if a request is made under Personal Information Protection Act (PIPA) for access to that information. By signing this letter, you consent (adult and minor children alike) to our use and disclosure of personal information as is necessary for the purpose of preparing your (and your family members ) personal income tax return(s), including: transferring personal financial information from one family member s return onto another family member s return, in order to maximize eligible tax credits, minimize taxes payable, or take advantage of deductions; filing your (and your family members ) tax return(s) with CRA; and delivering your (and your family members ) completed Tax Return(s) to you or any family member. We reserve the right to share required information with our external IT support, program developers and/or contractors whom are supporting us in the completion of your tax return(s). We may also disclose information to certain companies for which we have an outsourced relationship with or program IT support. At the extent possible, we ensure only minimal information is transferred and that they have confidentiality and internal control procedures in place to protect your information. In connection with this engagement, we may communicate with you or others via telephone, facsimile, post, courier and transmission. As all communications can be intercepted or otherwise used or communicated by an unintended third party, or may not be delivered to each of the parties to whom they are directed and only to such parties, we cannot guarantee or warrant that communications from us will be properly delivered only to the addressee. Therefore, we specifically disclaim and waive any liability or responsibility whatsoever for interception or unintentional disclosure of communications transmitted by us in connection with the performance of this engagement. In that regard, you agree that we shall have no liability for any loss or damage to any person or entity resulting from the communications, including any consequential, incidental, direct, indirect, or special damages, such as loss of revenues or anticipated profits, or disclosure or communication of confidential or proprietary information. /3

8 - 3 - Our fees will be determined on the basis of time spent at our standard billing rates. Amounts relating to any agreed special assignments would be billed as separate items. Payment in full will be made to us within 30 days of the date each billing rendered. Interest is to be charged on overdue accounts at the rate of 1.5% per month (effective rate of 19.56% per annum). If there are unpaid fees related to any non-arms length party of yours, we reserve the right to delay work on your file until this is settled. We accept no liability for repercussions of this delay. The total liability of Sadovnick Morgan LLP and any of its partners and employees for any errors, omissions or negligent acts, whether they are in contract, or in tort, or in breach of fiduciary duty or otherwise, arising from any professional services performed or not performed by Sadovnick Morgan LLP or by any of its partners or employees for the client, in respect of this engagement, shall be limited to the sum available in respect of the liability of Sadovnick Morgan LLP, under the policy or policies of professional liability insurance to indemnify Sadovnick Morgan LLP, at the time the claim is made. claim shall be brought against the accounting firm in contract, negligent misrepresentation or tort more than two years (from date of tice of Assessment) after the services were completed or terminated under this engagement. Sadovnick Morgan LLP can only file your returns and information returns once we receive the signed documents and review them to ensure they were properly completed. If any documents are received late, we will not assume any responsibility for penalties or interest. This also applies to files dropped off at the firm with an unreasonable time frame until the filing deadlines. The firm cannot be relied upon to follow up with you to ensure you provide the signed documents on time, this is your responsibility. In addition, the liability of the firm for disallowed tax deductions/credits will be limited to the interest/penalty component of the amount owing, for which the firm made an error, but this will not include items where the filing positions were discussed with you, nor due to adjustments related to your representations to the firm. In accordance with professional regulations, our client files must periodically be reviewed by provincial practice inspectors and by other Sadovnick Morgan LLP personnel to ensure that we are adhering to professional and Sadovnick Morgan LLP standards. File reviewers are required to maintain confidentiality of client information. The terms of this engagement letter shall remain in effect unless superseded by another agreement. The agreement shall apply to tax filings for prior years and subsequent years, including, but not limited to, correspondences and advisory services related to your personal tax compliance requirements. If the services outlined are in accordance with your requirements and if the above terms are acceptable to you, please sign the enclosed copy of this letter and return it to us. We appreciate this opportunity to be of service. This engagement letter is effective as of February 15, Yours truly, SADOVNICK MORGAN LLP I have read all pages of this entire agreement and the services and terms as set out above are as agreed. As well, I acknowledge and accept my responsibilities as the taxpayer as outlined above. ALL FAMILY MEMBERS OVER 18 MUST SIGN AN ENGAGEMENT LETTER. Signature: Print Name: Signature: Print Name: Signature: Print Name:

9 SADOVNICK MORGAN LLP A FEW QUESTIONS REGARDING YOUR ESTATE PLAN A number of our clients find it useful to keep their important estate planning documents with a third party, often their accountant. As such, we are requesting that our clients provide us with basic information related to their estate. This will help us better plan your estate as well as act as a resource for your family if needed. In order to help us, please complete the below basic questionnaire. IF YOU HAVE COMPLETED IN PRIOR YEARS, PLEASE ONLY PROVIDE IF CHANGED YOUR NAME: YOUR BENEFICIARIES: YOUR EXECUTOR: AGE? When did you last review your overall legacy / estate plan? Do you have a Power of Attorney in place? Y N Who is it? Do you have a Representation Agreement for Healthcare? Y N Where is your will? Do you have a Will? Y N When was it last updated? Do you have life insurance? Y N When did you last review your life insurance needs? Are you the beneficiary or trustee of any trusts, including alter ego trusts? Y N Do you have any charitable gifts that you are planning to make with your estate? Y N What are the names of your other advisor(s)? Lawyer: Insurance: Investments: Banker/Bank: Other: Are you (or beneficiaries/trustees) a US Citizen, resident or Green Card Holder? Y N Do you have any US assets (including real estate and US stock?) Y N If you have any specific concerns that you would like to discuss with us, please reach out and we will arrange a time to meet. Suite Granville Street Vancouver, BC Tel: Box 312, th Street Edmonton, AB T5T 4J5 Tel/Fax:

10 SADOVNICK MORGAN LLP Form T1135 Foreign Income Verification Statement Do you have.. INVESTMENTS (including cash, bonds, funds, share investments, real estate properties, etc.) 1. Over $100, Under $100,000 Yes "Foreign Investment Property" (See Page 2 for definition) 1. Over $250, Over $100,000 and under $250,000 thing needs to be done Lucky! Detailed Reporting (Complete Part B of T1135) Simplified Reporting (Complete Part A of T1135) *** We strongly encourage you to speak to your investment advisors to ensure the investments are identified and properly recorded *** What is the Form T1135? The form must be filed by Canadian residents that at any time during the year owned foreign investment property which cumulatively had a cost of more than $100,000 CDN. Foreign Investment Property includes: Cash held in a foreign bank account; Shares in a foreign company (including those held in a Canadian brokerage account); Interest in certain non-resident trusts; Debt owed by a non-resident, bonds or debentures issued by foreign governments or foreign companies (including US treasury bonds); Interests or units in offshore mutual funds; Real estate situated outside Canada; And many others, please check with us if there is a question. Foreign investment property does not include: Personal-use property (i.e. a vehicle, vacation property that is not rented out, jewelry, artwork); Foreign property held in a Canadian-based mutual fund; Foreign property held within registered plans like RRSPs, LIFs, RRIFs, LIRAs, TFSAs, RESPs and RDSPs; Foreign affiliate a non-resident corporation where you own at least 10% of the outstanding shares; Assets used only in an active business (i.e. business inventory or the equipment and building used in a business). Suite Granville Street Vancouver, BC Tel: Box 312, th Street Edmonton, AB T5T 4J5 Tel/Fax: /2

11 -2- What information is required on the Form T1135? Simplified Reporting Method for total cost between $100,000 and $250,000 (Complete Part A) For the lucky taxpayers who only have to complete Part A, the form becomes much easier. They only have to provide the following: The taxpayer s information (i.e. name, address, SIN, etc.); Check the boxes that describe the type of specified foreign property that they held during the year; List the top three country codes that the taxpayer holds specified foreign assets in. Based on maximum costs for the year; Disclose the income from all specified foreign property and any gain (loss) from the disposition of specified foreign property (the hard part). Detailed Reporting Method for total cost over $250,000 (Complete Part B) The following information is required on the Form T1135 for specified foreign property held outside of Canadian registered security dealers and Canadian trust companies: Name of the bank or other entity that holds the funds outside Canada o Maximum funds held during the year o Funds held at the end of the year Name of each non-resident corporation in which you owns shares of (not including foreign affiliates) Country where each specific foreign investment property is located / registered Maximum cost in Canadian dollars of each specific foreign investment property at the end of the year and highest cost during the year Income (loss) and capital gain(loss) for each specified foreign investment property For specified foreign property held within a Canadian registered security dealer or Canadian trust company, the following information is required: Name of Canadian registered security dealer or Canadian trust company Aggregate of investments by county (done on a county by country basis) Maximum fair market value of property held during the year (month-end fair market values are acceptable) Fair market value at the end of the year Aggregate income (loss) and capital gain (loss) on disposition by country Please refer to the attached Form T1135 for details of specific information required. You may be able to obtain a detailed T1135 reporting package from your investment advisors. What is the filing deadline? Individuals: Generally April 30 or June 15 for self-employed Corporation: 6 months after the company s year end Trusts: 90 days after the trust s year end Partnership: Dependent on whether the partners are individuals, corporations, or both smllp /3

12 -3- What happen if I do not accurately file on time? Failure to file a return When imposed Penalty Failure to file $25/day for up to 100 days (minimum $100; maximum $2,500) Failure to file knowingly or because of gross negligence After 24 months $500/month for up to 24 months (maximum $12,000), less any penalties already levied. 5% of the greatest total cost of the specified foreign property at any time in the year, less any penalties already levied. False statements or omissions When imposed Person or partnership knowingly or under circumstances amounting to gross negligence, makes false statements or omissions in Form T1135 Penalty 5% of the greatest cost, at any time in the year, of the foreign property about which the false statement or omission was made (minimum $24,000) Extension of the normal reassessment period In addition to these penalty provisions, the new provisions announced add a 3 year extension to the normal reassessment period which will apply to the entire tax return (i.e. the tax return will not be statute barred until 6 years after the date of the original notice of assessment). These provisions will apply in the cases where a T1135 has either not been filed or it has been filed in an incomplete or incorrect manner. In closing.. In order for us to prepare the Form T1135 in time, we recommend that you contact your investment advisors as soon as possible and start preparing a list of foreign investments with the required information. Be aware that there may be additional cost for compliance. We will appreciate receiving the information from you by April 2, If you have any questions, please do not hesitate to contact us. Yours truly, SADOVNICK MORGAN LLP Enclosures: smllp