Form T1135: Filing Requirements, Deadlines, and Penalties

If you are a Canadian resident and the total cost of your foreign property went over $100,000 CAD at any point during the year, you have to file Form T1135, the Foreign Income Verification Statement, with the Canada Revenue Agency. The filing requirements for Form T1135 turn on three things: whether you count as a specified Canadian entity, whether what you hold counts as specified foreign property, and whether the cost of that property crossed the threshold. Get any of those wrong and the penalties escalate quickly.

Who Has to File

Section 233.3 of the Income Tax Act requires any “specified Canadian entity” to file Form T1135 when the total cost of their specified foreign property exceeds $100,000 CAD at any point during the tax year. That covers Canadian resident individuals, corporations, and certain trusts. Partnerships also have to file if the share of partnership income or loss attributable to non-resident members is less than 90% for the fiscal period.¹

The threshold uses the adjusted cost base of the property, not its current market value. That distinction matters. Buy foreign investments for $110,000 CAD, watch them drop to $80,000, and you still have to file, because the cost crossed the threshold.

If you became a Canadian resident during the year, you get a pass for that first year. Starting the following year, the cost amount of your foreign property is its fair market value on the date you became a resident, and that value is your baseline for measuring the $100,000 threshold going forward.²

What Counts as Specified Foreign Property

The definition is broader than most people expect. It is not limited to offshore bank accounts. Specified foreign property includes:¹

Funds held in foreign bank accounts, including chequing, savings, and term deposits.
Shares in non-resident corporations, even when held through a Canadian brokerage.
Interests in non-resident mutual funds or similar pooled investments.
Debt owed to you by non-resident individuals or entities.
Foreign real estate held for investment, such as rental property or land held for appreciation.
Beneficial interests in non-resident trusts.
Interests in partnerships that own specified foreign property.
Intangible property situated outside Canada, such as intellectual property or contract rights.

The brokerage point catches a lot of filers. Owning $120,000 worth of U.S. stocks through a Canadian brokerage account counts, because the shares themselves are shares of a non-resident corporation. Diversified portfolios can cross $100,000 without the account holder realizing it.

Cryptoassets are treated by the CRA as intangible personal property. If they are situated, deposited, or held outside Canada, they qualify as specified foreign property and belong on Form T1135. Cryptoassets held by regulated, Canadian-resident crypto trading platforms are generally not specified foreign property. Crypto held on foreign exchanges or through decentralized protocols is a harder question, and the CRA has acknowledged that the issue of where cryptocurrency is “located, deposited or held” remains under review. The safer approach for significant holdings on a foreign-based exchange is to include them.

What Is Excluded

Several categories are carved out from the reporting requirement:²

Personal-use property. A vacation home or other property used primarily (more than 50%) for personal purposes by you or a related person. A Florida condo you use as a winter retreat and never rent out does not count toward the threshold.
Property used exclusively in an active business. The word “exclusively” is doing real work. If property serves both business and investment purposes, it is not excluded.¹
Specified foreign property held inside an RRSP or TFSA.
Investments in Canadian mutual fund trusts or corporations, even if the fund itself holds foreign assets.
Shares of, or debts owed by, a non-resident corporation that qualifies as your foreign affiliate. Those get reported on Form T1134 instead.

U.S. retirement accounts held by Canadian residents, such as 401(k)s and IRAs, are a common question. The CRA has not explicitly excluded them the way it has for RRSPs and TFSAs. The Canada-U.S. tax treaty provides certain deferral benefits, but T1135 reporting is a separate question. Confirm with a cross-border tax professional before assuming these accounts are exempt.

Joint Ownership

When two or more people own foreign property together, each owner determines their filing obligation based on their own share of the cost. Joint ventures do not file Form T1135 as an entity; each party evaluates their own position.²

The same rule applies to spouses. If you and your spouse jointly own a foreign rental property with a total cost of $180,000 CAD, each of you has a cost of $90,000 on a 50/50 split, and neither would need to file based on that property alone. But you must aggregate all of your specified foreign property. If either spouse holds other foreign investments that push their personal total above $100,000, the filing obligation kicks in for that spouse.

Simplified vs. Detailed Reporting

The form has two methods, and which one applies depends on how high your foreign holdings climbed during the year.

Part A, the simplified method, applies when the total cost of all your specified foreign property stayed below $250,000 throughout the entire year. You check off broad property categories and provide aggregate income and cost figures rather than listing each asset.³

Part B, the detailed method, is required if the total cost reached $250,000 or more at any point during the year. It calls for substantially more information for each property: the country where it is located, the maximum cost during the year, the cost at year-end, the gross income generated (interest, dividends, rent, or other income), and any capital gains or losses on disposition.³

All amounts go on the form in Canadian dollars. Convert using the appropriate Bank of Canada exchange rate: the rate on the acquisition date for cost amounts, and the rate on the date income was received or the disposition occurred for income and gains. A conversion error can push you into the wrong reporting tier or misstate income, so keep records of the rates you used.

Deadlines and How to File

Form T1135 is due on the same date as your income tax return, even if you do not have to file a return that year. For partnerships, it follows the due date of the partnership information return.² The standard dates:

Most individuals: April 30 of the following year.³
Self-employed individuals: June 15 of the following year, though any tax owed on the related income still has to be paid by April 30.³
Corporations: six months after the end of the corporation’s tax year.

Most filers submit electronically through NETFILE or EFILE, or through the My Account or Represent a Client portals. Paper filers can attach the form to a paper-filed tax return or send it separately to the Winnipeg Tax Centre by the deadline.³

Records to Keep

The CRA requires taxpayers to keep supporting documentation for at least six years, even though the form does not ask you to attach those records.⁴ For T1135 purposes, that means foreign account statements, brokerage records, purchase confirmations, rental income documentation, and the exchange rates you used for conversions. If the CRA questions your filing, you will need these to substantiate what you reported.

Penalties for Missing or Wrong Filings

The penalty structure escalates with the seriousness of the failure.⁵

Late filing: $25 per day the form is overdue, for up to 100 days, with a $100 minimum and a $2,500 maximum. A form filed two months late runs about $1,500.
Gross negligence or willful failure to file: $500 per month for up to 24 months, to a maximum of $12,000, less any late-filing penalties already assessed.
False statements or omissions: the greater of $24,000 or 5% of the cost of the foreign property that was misstated or omitted. This is the heaviest penalty and applies when the CRA concludes inaccurate information was provided knowingly or through gross negligence.

There is a second consequence beyond the dollar penalty. For 2013 and later tax years, the CRA’s normal reassessment period is extended by three additional years if you failed to report income from specified foreign property and Form T1135 was not filed, was filed late, or was filed with inaccurate information.² Missing the form gives the CRA a longer window to audit your entire return, not just the foreign property portion.

If you missed filing for previous years or reported inaccurately, the CRA’s Voluntary Disclosures Program allows you to come forward and correct the record, with penalty relief granted on a case-by-case basis.⁶ The disclosure has to be voluntary, meaning the CRA has not already contacted you about the issue, and it must be complete. Waiting until you receive an audit letter disqualifies you.

A Note for U.S. Citizens Living in Canada

Form T1135 is a Canadian reporting obligation and does not satisfy any U.S. requirements. Canadian residents who are also U.S. citizens or green card holders may also need to file the U.S. FinCEN Form 114 (FBAR) for foreign accounts exceeding US$10,000 and IRS Form 8938 (Statement of Specified Foreign Financial Assets) if their holdings exceed thresholds that vary by filing status and whether they live in the United States or abroad. The thresholds, covered assets, and penalties are different across all three forms. Cross-border filers should work with a professional who handles both systems.

1
Department of Justice Canada. Income Tax Act – Section 233.3
2
Canada Revenue Agency. Questions and Answers About Form T1135
3
Canada Revenue Agency. Foreign Income Verification Statement
4
Canada Revenue Agency. How Long Should You Keep Your Income Tax Records
5
Canada Revenue Agency. Penalties
6
Canada Revenue Agency. Voluntary Disclosures Program