If you hold foreign investments, real estate, or bank accounts, the CRA requires you to disclose those holdings each year through Form T1135 — the Foreign Income Verification Statement. Missing this filing carries stiff daily penalties, and the CRA has been stepping up enforcement in recent years. Here is a plain-language guide to T1135 foreign property reporting in Canada: what you must declare, how to calculate your exposure, and what happens if you miss the deadline.
The T1135 is an annual information return filed with your Canadian tax return. Its purpose is not to collect tax — it is purely a disclosure form. The CRA uses it to track foreign assets held by Canadian residents and to verify that income earned on those assets is being reported correctly on your T1 or corporate return.
The form has existed since 1997, but the CRA has significantly expanded its enforcement efforts and data-sharing arrangements with foreign tax authorities (including the IRS and OECD partners under the Common Reporting Standard). Failing to file is no longer a low-risk oversight.
You are required to file T1135 if you are a Canadian resident (including certain deemed residents) who owns specified foreign property with a total adjusted cost base exceeding $100,000 CAD at any point during the tax year. This obligation applies to:
Note that the test is whether you exceeded $100,000 at any point during the year — not just at year-end. If your foreign holdings peaked above the threshold in March and dropped below it by December 31, you still need to file for that year.
This is one of the most commonly misunderstood aspects of T1135 foreign property reporting. The threshold is measured using the adjusted cost base (ACB) — what you paid for the asset — not its current fair market value.
Suppose you purchased U.S. equities for $110,000 CAD, and by year-end those shares are worth only $50,000 due to a market downturn. You are still required to file T1135. The market loss does not eliminate your reporting obligation because the cost basis remains above $100,000.
When your foreign assets are denominated in a foreign currency, you must convert the cost to Canadian dollars using the average annual exchange rate published by the Bank of Canada for the relevant year — not the rate on the date of purchase or the year-end spot rate.
The definition of "specified foreign property" under the Income Tax Act is broad. It includes:
One point that surprises many investors: U.S. or other foreign securities held inside a Canadian brokerage account — such as RBC Direct Investing, TD Direct Investing, or Questrade — are still specified foreign property. The fact that the account is maintained by a Canadian institution does not change the nature of the underlying assets. If you hold Apple, Amazon, or a U.S.-listed ETF in a non-registered account and the cost exceeds $100,000, T1135 applies.
Not everything foreign triggers a T1135 obligation. The following are explicitly excluded from the definition of specified foreign property:
If your foreign equities are held entirely within registered accounts, you do not need to file T1135 — a significant planning point for investors considering where to hold international allocations.
The T1135 offers two reporting methods depending on the total cost of your foreign holdings.
If the total adjusted cost base of all your specified foreign property was less than $250,000 throughout the entire year, you may use the simplified method. Rather than listing each individual asset, you report by category:
This method significantly reduces the administrative burden for investors with modest cross-border holdings.
Once the total cost of your specified foreign property exceeds $250,000 at any point during the year, the detailed method is mandatory. You must report each property individually with:
For investors or business owners with substantial international portfolios, the detailed method can involve considerable record-keeping — particularly when tracking the ACB of foreign securities across multiple currencies and tax years. This is an area where working with an experienced firm like Swift Accounting Calgary pays for itself in accuracy and peace of mind.
The CRA takes T1135 non-compliance seriously, and the penalty structure reflects that.
If you file T1135 after the deadline without the CRA having contacted you first, the penalty is $25 per day, with a minimum of $100 and a maximum of $2,500. The deadline for individuals is generally April 30 (or June 15 for self-employed taxpayers), matching your income tax return.
If the CRA determines that the failure to file was the result of gross negligence or a deliberate decision not to comply, the penalties escalate sharply:
On a $500,000 foreign portfolio, the 5% penalty alone could reach $25,000 — on top of the daily penalties and any tax owing on unreported income. These are not nominal amounts, and the CRA has the authority to assess them going back several years if non-compliance is discovered on audit.
If you have missed T1135 filings for previous tax years and the CRA has not yet contacted you, you may be eligible to come forward through the Voluntary Disclosures Program (VDP). A successful VDP application can result in penalty relief and, in some cases, partial interest relief — though you will still owe the underlying tax on any unreported foreign income.
To qualify, the disclosure must be voluntary (the CRA cannot already be conducting an audit or have contacted you about the issue), complete, and involve a penalty that would otherwise apply. The VDP process involves specific documentation requirements, and it is advisable to work with a qualified tax professional before submitting. The team at Swift Accounting can help assess your situation and structure a disclosure that meets CRA requirements.
If you think you may be approaching or over the $100,000 cost threshold, take these steps before your next filing deadline:
Yes. The threshold is based on the adjusted cost base — what you originally paid — not the fair market value at year-end. If your cost exceeded $100,000 CAD at any point during the year, the filing obligation applies regardless of what the investments are worth now.
It depends on how the account is registered. If the U.S. ETFs are held in a non-registered (taxable) account, they are specified foreign property and count toward the $100,000 threshold. If they are held inside a TFSA, RRSP, RRIF, or RESP, they are excluded from T1135 reporting entirely.
For individuals, T1135 is due on the same date as your income tax return: April 30 for most taxpayers, or June 15 if you or your spouse are self-employed. For corporations, it is due six months after the corporation's fiscal year-end. Missing this deadline triggers the $25/day penalty immediately.
Potentially yes, through the CRA's Voluntary Disclosures Program. If the CRA has not yet contacted you regarding those years, a VDP application may reduce or eliminate the late-filing penalties — though any tax owing on unreported foreign income must still be paid. Acting promptly matters, because VDP relief is only available before CRA initiates contact or an audit.
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