Form T1135 is a disclosure form, not a tax: Canadian residents use it to tell CRA what foreign property they hold once its total cost passes $100,000. The income that property earns is taxed separately, as explained in foreign income tax in Canada . This guide is part of the international and cross-border tax guides .
Foreign Income Verification Statement Purpose Details Report Foreign property over $100K Who files Canadian residents Threshold Total cost exceeds $100,000 Due date With tax return
Why It Exists Goal Details CRA tracking Foreign assets Income reporting Ensure foreign income reported Tax compliance Prevent offshore hiding
The $100,000 Threshold How It Works Rule Details Total cost All specified foreign property Anytime during year Not just year-end CAD equivalent Convert foreign currency Cost NOT value Original cost, not market value
Example Foreign Assets Cost (CAD) US bank account $50,000 UK investment account $40,000 Australian shares $15,000 Total $105,000
Must file T1135.
What Counts as Specified Foreign Property Included Property Type Example Foreign bank accounts US savings account Foreign investment accounts Brokerage outside Canada Foreign stocks/bonds Held directly abroad Foreign rental property Condo in Florida Foreign business interests Over 10% ownership Foreign mutual funds Held abroad Foreign trusts Beneficiary interest
NOT Included (Excluded) Property Type Why Excluded US stocks in Canadian RRSP/TFSA Registered plan Stocks held in Canadian brokerage Held by Canadian dealer Personal-use property Vacation home (not rental) RRSP, TFSA, RESP Registered accounts Business inventory Excluded Canadian mutual funds (even if hold foreign) Canadian fund
Common Confusion US Stocks in Canadian Account Situation T1135 Required? US stocks at Questrade No US ETFs at TD Direct No US account at Charles Schwab Yes (if over $100K) Wealthsimple TFSA holding US No
Real Estate Property T1135 Required? Rental property abroad Yes Vacation home (personal) No Mixed use Rental portion counts
Two Reporting Methods Simplified vs. Detailed Method When to Use Simplified $100,000 - $250,000 cost Detailed Over $250,000 cost
Simplified Method (Part A) Report Details Category Type of property Top 3 countries By value Total income From foreign property Total cost By category
Detailed Method (Part B) Report Details Each property Listed individually Country For each Maximum cost During year Year-end value December 31 Income From each
How to Complete T1135 Step 1: Determine If Required Question Answer Foreign property cost >$100K At any time? Held by Canadian dealer? Then excluded Personal use? Usually excluded
Step 2: Calculate Cost For Each Property Record Original cost In CAD Date acquired When purchased Maximum during year Highest cost anytime Year-end cost December 31
Section What to Report Categories Funds, shares, real estate, etc. Income Interest, dividends, rent, gains Countries Where property located
Categories of Property Category Breakdown Category Examples Funds outside Canada Bank accounts, foreign cash Shares (non-Canadian) Direct foreign shareholdings Indebtedness Loans to non-residents Real property Foreign land/buildings Other property Patents, other assets
Per-Category Reporting For Each Category Report Total cost Maximum during year Year-end cost December 31 value Income All income from category Gain/loss If sold
Income Reporting Types of Foreign Income Income Type Report Interest From foreign accounts Dividends From foreign shares Rental income From foreign property Capital gains On sale
Where Else to Report Income Also On Interest Schedule 4 Dividends Schedule 4 Capital gains Schedule 3 Rental T776
T1135 is disclosure in addition to income reporting.
Penalties Late Filing Penalty Amount Minimum $100 Daily penalty $25/day Maximum $2,500
Failure to File Situation Penalty Gross negligence $12,000 Or 5% of cost of property Whichever greater More serious
Extended Assessment Period Normal 3 years If T1135 not filed 6 years If never filed No limit
Voluntary Disclosure Missed T1135s can be filed late through CRA’s Voluntary Disclosures Program, which can reduce penalties when you come forward before CRA contacts you; the conditions and application are in the CRA voluntary disclosure guide . What else can follow unreported foreign income, from reassessment to gross negligence penalties, is covered in what happens if you don’t report foreign income .
Common Scenarios Scenario 1: US Account Facts Canadian resident US Charles Schwab account Cost $120,000 T1135 required Yes
Scenario 2: Canadian ETF Facts Canadian resident VUN (Vanguard US Index) Cost $200,000 Held at Questrade T1135 required No (Canadian fund)
Scenario 3: Foreign Rental Facts Canadian resident Condo in Florida (rental) Cost $150,000 T1135 required Yes
Scenario 4: Vacation Home Facts Canadian resident Vacation home in Arizona Personal use only Cost $300,000 T1135 required No (personal use)
Checklist Annually Review Question Yes/No Any new foreign property? Total cost >$100K? Any exclusions apply? T1135 required?
Documentation to Keep Document Purpose Purchase records Original cost Account statements Year-end values Foreign tax slips Income reporting Exchange rates For conversion
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