Are You Secretly Required to File a T1135? Most Canadians Get This Wrong
The hidden triggers that catch even experienced taxpayers off guard when T1135 filing is requited
Filing taxes in Canada can become significantly more complex when foreign assets are involved. One of the most commonly misunderstood compliance requirements is the T1135 Foreign Income Verification Statement, which is mandated by the Canada Revenue Agency (CRA).
Many taxpayers either over-report unnecessarily or, worse, fail to report when required—leading to costly penalties. This guide explains in detail when T1135 filing is required, what qualifies as foreign property, and common real-life scenarios that trigger this obligation.
Understanding the Purpose of T1135
The T1135 is not a tax calculation form—it is a disclosure form.
Its purpose is to:
Help the CRA track foreign investments
Ensure proper reporting of foreign income
Prevent tax evasion through offshore assets
Important: Filing T1135 does not mean you owe additional taxes. It simply ensures transparency.
The Core Rule: $100,000 Cost Threshold
The requirement to file T1135 is triggered when:
A Canadian tax resident owns specified foreign property with a total cost amount exceeding $100,000 CAD at any time during the year.
Key Points to Understand:
Cost Amount vs Market Value
The rule is based on original cost, NOT current market value.
Even if your investment drops in value, filing may still be required.
“At Any Time During the Year”
Even if the value exceeded $100,000 for just one day, T1135 is required.
Combined Total
You must combine all foreign assets to determine if you cross the threshold.
What is “Specified Foreign Property”?
Understanding what qualifies is crucial. The CRA defines specified foreign property broadly.
1. Foreign Bank Accounts
Includes:
Savings accounts
Fixed deposits
Checking accounts
Example:
A new immigrant keeps:
$80,000 in India
$30,000 in UAE
Total = $110,000 → T1135 required
2. Foreign Stocks and Securities
Includes:
Shares of foreign companies (e.g., US stocks)
Foreign ETFs
Bonds issued outside Canada
Important Distinction:
Held in non-registered accounts → reportable
Held in RRSP/TFSA → NOT reportable
3. Foreign Rental Properties
Real estate outside Canada must be reported if held for income generation.
Must Report:
Rental properties
Land held for investment
Not Required:
Personal-use property (e.g., vacation home)
Example:
Owning a rented apartment in India worth $150,000
T1135 required
4. Foreign Mutual Funds
Includes:
Offshore investment funds
Non-Canadian pooled investments
These are often overlooked, especially by immigrants who continue investing in their home country.
5. Interests in Foreign Corporations
If you own shares in a foreign company:
Passive investments → reportable
Active business operations → may be excluded (depending on structure)
6. Foreign Trusts
If you:
Are a beneficiary
Have contributed to a foreign trust
This may trigger T1135 and possibly additional reporting forms.
What is NOT Considered Specified Foreign Property?
Many taxpayers mistakenly over-report. The following are excluded:
Canadian Registered Accounts
RRSP
TFSA
RRIF
Even if these hold US stocks → No T1135 required
Personal-Use Property
Vacation homes
Property not used to earn income
Canadian Mutual Funds
Even if they invest globally
Assets Used in Active Business
If actively used in a business abroad
Common Real-Life Scenarios That Require T1135
Let’s break down practical cases relevant to Canadian taxpayers.
Scenario 1: New Immigrant to Canada
A person moves to Canada and brings:
$120,000 in foreign bank accounts
Even if funds were earned before coming to Canada:
T1135 required after becoming a tax resident
Scenario 2: Investing in US Stocks
A taxpayer invests:
$70,000 in US stocks
$40,000 in foreign ETFs
Total = $110,000
Filing required
Scenario 3: Rental Property Abroad
A taxpayer owns:
Rental property in home country
Even if:
No profit is earned
Property is vacant
Still reportable
Scenario 4: Joint Ownership with Spouse
If a couple jointly owns:
$200,000 foreign investment
Each reports their share:
$100,000 each → both must file
Scenario 5: Temporary Threshold Crossing
A taxpayer:
Transfers $120,000 abroad temporarily
Later reduces it to $80,000
Since it exceeded $100K at any point
T1135 required
Simplified vs Detailed Reporting Methods
There are two reporting methods depending on asset value:
Simplified Method (Under $250,000)
If total foreign property is:
Between $100,000 and $250,000
You can report:
By country
Without listing each asset individually
Detailed Method (Over $250,000)
If over $250,000:
Must disclose each asset separately
Provide:
Income earned
Gains/losses
Maximum cost during the year
Filing Deadline
T1135 must be filed:
On or before your tax return due date
For most individuals:
April 30
Self-employed:
June 15 (but taxes due April 30)
Penalties for Not Filing T1135
This is where compliance becomes critical.
Basic Penalty:
$25 per day
Minimum: $100
Maximum: $2,500
Gross Negligence Penalty:
Up to $12,000+
Extended Reassessment Period:
CRA can reassess your return for up to 6 years
Common Mistakes Taxpayers Make
“I didn’t earn income, so I don’t need to file”
Wrong. T1135 is based on ownership, not income.
“It’s my personal money back home”
Still reportable if it exceeds threshold.
“It’s joint with family, so I’m safe”
You must report your share.
“My accountant didn’t ask, so I’m fine”
Responsibility lies with the taxpayer.
Strategic Importance for Tax Planning
T1135 is more than just compliance—it’s an opportunity for better tax planning.
For Individuals:
Avoid penalties
Ensure proper foreign income reporting
For Tax Professionals:
Identify hidden risks
Offer “Foreign Asset Review” services
Build trust with immigrant clients
Who Should Pay Special Attention?
The following groups are at higher risk:
New immigrants
International students with savings abroad
High-income professionals
Real estate investors with foreign property
Individuals investing in US markets
Finally: Do You Need to File T1135?
Ask yourself:
Do I own foreign assets?
Did their total cost exceed $100,000 at any time?
Are they income-generating or investment assets?
If YES → You likely need to file T1135
The T1135 filing requirement is one of the most important compliance obligations for Canadians with foreign assets. While it may seem like just another form, failing to file it can lead to serious financial consequences.
Understanding the rules—especially the $100,000 cost threshold and what qualifies as specified foreign property—is essential for staying compliant.
Whether you are a new immigrant, an investor, or a seasoned taxpayer, reviewing your foreign holdings annually is critical. When in doubt, it is always better to disclose than risk penalties.