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
If You Haven’t Filed
| Option |
Details |
| Voluntary Disclosure Program |
Reduced penalties |
| Requirements |
Must be voluntary |
| Professional help |
Recommended |
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 |