Specified Foreign Property: Threshold, Reporting, and Penalties

Specified foreign property is any asset that sits outside Canada, is issued by a non-resident, or represents a debt owed by a non-resident, held by a Canadian resident for investment or other non-personal purposes. Under section 233.3 of the Income Tax Act, you have to file Form T1135 (Foreign Income Verification Statement) once the total cost of everything in that category crosses $100,000 at any point during the tax year.¹ The definition is broader than most people expect, and the trigger is total cost, not fair market value.

What Counts

The statute captures assets by their location, their issuer, or the residency of the person who owes on them. The main categories:¹

Foreign bank accounts in any currency, and intangible property such as patents and copyrights situated or deposited outside Canada.
Real estate held outside Canada for investment, including rental properties, commercial buildings, and vacant land held for development.
Shares in non-resident corporations. This is the one that surprises people most often: a U.S. stock held through your Canadian brokerage is still a share of a non-resident corporation, and it still counts.²
Bonds, debentures, mortgages, and notes receivable owed by non-resident individuals, corporations, or governments.
Interests in non-resident trusts that you acquired for consideration.
Interests or rights in non-resident entities, including foreign partnerships that hold specified foreign property.
Property that can be converted into or exchanged for specified foreign property.

The location of paper certificates or account statements does not change the analysis. What matters is where the asset is situated or who issued it.

What Doesn’t Count

Several categories are carved out so the reporting rule targets investment holdings rather than personal or business assets.

Personal-use property, such as a vacation home used primarily (more than 50%) by you or a related person, and not held with a main expectation of profit. Rent it out most of the year and it stops qualifying as personal-use.³
Property used or held exclusively for carrying on an active business. The word is “exclusively”: any investment use defeats the exclusion.¹
Foreign assets inside an RRSP, TFSA, or other registered plan. Those holdings are not reported on Form T1135 regardless of value.³
Shares and debts of a non-resident corporation or trust that qualifies as a foreign affiliate under section 233.4. Those are reported separately.¹
Interests in non-resident trusts that you inherited or received as a gift, rather than purchasing.
Interests in a partnership that is itself a specified Canadian entity.

Cryptocurrency

The CRA treats cryptocurrency as intangible personal property, which means it can be specified foreign property if it is situated, deposited, or held outside Canada. Crypto held through a regulated Canadian-resident trading platform is generally not reportable. Crypto held on a foreign exchange, or in a wallet hosted on servers outside Canada, is a harder question, and the CRA has said the location analysis in those cases is still under review. If foreign-exchange crypto could push your total across $100,000, the cautious course is to include it in the cost calculation.

The $100,000 Threshold and How Cost Amount Works

The filing obligation is triggered when the total cost amount of all your specified foreign property exceeds $100,000 at any time during the year.¹ It’s an aggregate test across every qualifying asset, not per-property. Two foreign bank accounts of $60,000 each will trigger it.

Cost amount, defined in subsection 248(1), generally means adjusted cost base: what you paid to acquire the property. It is not fair market value. A foreign stock portfolio you bought for $80,000 that has since grown to $200,000 has a cost amount of $80,000, and no filing obligation on its own. A property you bought for $120,000 that has fallen to $50,000 has a cost amount of $120,000, and the obligation still applies.

Two exceptions change the starting number. If you immigrated to Canada, the cost amount is the fair market value on the date you became resident. If you received the property as a gift or inheritance, the cost amount is the fair market value on the date you received it.

Cost amounts must be expressed in Canadian dollars, converted at the exchange rate in effect on the acquisition date. The Bank of Canada’s published rates are the standard reference. Later exchange-rate movement does not change the cost amount already recorded, though new purchases at new rates can push a total over the line.

Simplified or Detailed Reporting

Form T1135 has two reporting tiers, and which one applies depends on whether your total cost amount stayed under $250,000 for the whole year.²

Part A is the simplified method, available when the total cost stayed above $100,000 but below $250,000 for the entire year. You tick a box for each type of property held and report total income, gains, and losses, without listing each asset individually.

Part B is the detailed method, and it becomes mandatory if your total cost hit $250,000 or more at any point during the year, even briefly. Part B requires country-by-country identification, maximum and year-end cost amounts for each category, and itemized income and disposition details.

If your total sat between $100,000 and $250,000 throughout the year, you can pick either tier. Most filers in that range use Part A.

Who Has to File

The obligation falls on any “specified Canadian entity” that crosses the threshold:²

Canadian resident individuals.
Corporations resident in Canada, whether taxable or tax-exempt.
Certain trusts resident in Canada.
Partnerships, where the income attributable to non-resident partners is less than 90% of the partnership’s total income.

Non-profits and tax-exempt entities are not excused. Residency in Canada plus foreign property above the threshold is enough.

When to File

Form T1135 is due on the same date as your income tax return. That’s April 30 for most individuals, June 15 for self-employed individuals, six months after fiscal year-end for corporations, and the partnership information return deadline for partnerships. The T1135 deadline applies even in a year when you would not otherwise be required to file a return.³

Individuals and partnerships can file electronically through EFILE or NETFILE. Corporations and trusts can file through EFILE. A paper form can be mailed to the taxation centre listed in the form’s instructions.²

Penalties

Late filing under subsection 162(7) costs $25 per day, with a $100 minimum and a $2,500 maximum per tax year.⁴ That applies to ordinary oversight.

Where the CRA finds a knowing failure or gross negligence, subsection 162(10) adds $500 per month for up to 24 months, less any 162(7) amount already assessed. The net exposure can reach $12,000 per year, on top of tax and interest on any unreported foreign income.⁵ If the CRA issues a formal demand to file and it is still ignored, the monthly amount doubles. Because the penalty applies per year, several missed years stack.

Fixing Missed Filings

If you’ve missed T1135 filings for prior years, the Voluntary Disclosures Program can reduce or eliminate the penalties above, though interest usually still applies. Eligibility requires all five of the following:⁶

No audit or investigation already started against you or a related taxpayer on the information you’re disclosing.
Complete information and documentation for every year or period being corrected.
Interest or penalties actually at stake on the omission.
Information at least one year past its original filing due date.
Payment of the estimated tax owing, or a payment arrangement approved by the CRA.

The program closes once the CRA has already contacted you about the issue, so a missed filing you notice yourself is a better position to act from than a missed filing the CRA notices first.

1
Justice Laws Website. Income Tax Act – Section 233.3
2
Canada Revenue Agency. Foreign Income Verification Statement
3
Canada Revenue Agency. Questions and Answers About Form T1135
4
Canada Revenue Agency. Table of Penalties
5
Justice Laws Website. Income Tax Act – Section 162
6
Canada Revenue Agency. Who Is Eligible – Voluntary Disclosures Program