Criteria & Circumstances that Require You to File a T1135
Canadian tax residents are taxable on their worldwide income. First, it’s important to know that tax residence has nothing to do with immigration status. You can be a Canadian citizen and be a non-resident for tax purposes, or you can be a visitor to Canada and become a tax-resident. Second, it’s essential to understand how the Canada Revenue Agency (“CRA”) determines if and how much income taxpayers earn from offshore sources.
The CRA has a number of tools at its disposal, including obtaining information from foreign governments and banks. However, one method the CRA uses involves looking to the taxpayer.
The Foreign Investment Verification form, or T1135 (found here), is a form that must be filled out and filed with the CRA by any taxpayer who, during a tax year, owns foreign property with a combined value exceeding $100,000 Canadian.
This doesn’t mean that the property’s value has to exceed $100,000 for the entire year. Rather, if at any time during the year, even if only due to currency fluctuations, the value of foreign property exceeds $100,000 Canadian, the form must be filed.
Form T1135 is due on the same date a taxpayer’s income tax return is due. Failing to file the T1135, or filing it with incomplete or inaccurate information, will result in the CRA assessing penalties.
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Penalties for not filing a T1135
Failing to file a T1135 results in an automatic penalty, regardless of whether the taxpayer was aware of their filing obligations.
The penalty starts at a minimum of $100 but is calculated at $25 per day for up to 100 days. The maximum penalty for each tax year is $2,500. In addition to this automatic penalty, the CRA may also choose to assess gross negligence penalties against a taxpayer. These are much harsher, at $500 per month for a maximum of 24 months, or a total of $12,000.
Penalties can increase further if you’ve been contacted by the CRA and received a demand to file a return. The penalties at this point rise to $1,000 per month for a maximum of 24 months, or a total of $24,000.
The penalty for making false statements or failing to report required information on a T1135 is not automatically applied, but rather in situations where the taxpayer is grossly negligent. The penalty amount is the higher of 5% of the cost of the specified foreign property or $24,000.
Important Details to Keep in Mind
Only the value of income-earning property is counted towards the $100,000 threshold for the T1135. In other words, personal property, like a vacation home, is not included.
There are, however, certain properties that must be reported on a T1135, even if they do not meet the $100,000 threshold. These are referred to as “specified foreign properties” and include foreign bank accounts, shares, and intellectual property.
Also included are interests in partnerships or joint ventures that hold specified foreign properties, as well as properties that are convertible into or exchangeable for specified foreign properties. However, this does not include properties used exclusively in carrying on an active business or a few other types of properties.
The value threshold of $100,000 is in Canadian dollars. This means that you need to convert the foreign currency or currencies into Canadian dollars, taking into account currency fluctuations throughout the year.
Adjusted Cost Base (ACB) and Undepreciated Capital Cost (UCC)
The $100,000 threshold is based on either the adjusted cost base (ACB) of the property or, if the property is depreciable, the undepreciated capital cost (UCC) of the property. Generally, ACB is the original cost of the property, plus any costs of acquiring it, and UCC is the residual value of the property after tax depreciation is taken.
In other words, the historic cost paid for the property or the residual value of the property, and not the property’s current fair market value. This means you don’t have to worry about appreciating property prices.
The only exception to using fair market value is if you received the property as a gift, inheritance, or bequest. This is because the cost to you of such property is the fair market value of the property at the time you received the gift, inheritance, or bequest. Any appreciation in value after this date is not considered.
Completing Form T1135
The T1135 form itself uses a two-tiered structure. If your foreign property exceeds the $100,000 limit but the total value is less than $250,000, you only need to complete the simplified reporting structure in Part A of Form T1135. Simple reporting involves checking off the types of property, eliminating the need to provide details about each type.
If, however, the total value in the year exceeds $250,000, then you must use the more detailed reporting structure in Part B of Form T1135. Part B requires a detailed description of each foreign property owned by the taxpayer. Again, currency fluctuations can push you from Part A to Part B, or back, if the foreign property value is close to the $250,000 dividing line. If the $250,000 threshold is crossed at any point in the year, then the more onerous reporting requirements apply even if the value of the properties falls below it at the end of the year.
📄 Looking for another form? Check out our list of CRA Tax Forms
Filing Procedures & Tips
Form T1135 can be filed electronically through certified tax software when submitted with your income tax return, or separately via the CRA’s “Submit Documents” portal. Paper filing remains an option, but electronic submission is strongly recommended for faster processing and easier record management.
Certification and Compliance
When filing Form T1135 (Foreign Income Verification Statement), taxpayers must certify that the information provided is accurate and complete.
For paper filings, the taxpayer (or an authorized representative such as an accountant) signs the form at the bottom, under the certification statement. This signature confirms that all information provided is true, correct, and complete to the best of the taxpayer’s knowledge.
For electronic filings, certification generally requires a positive action such as clicking a button (e.g., “Transmit Now” or “Start CRA Submission”) to certify and submit the form to the CRA. Most tax software prompts for a signature authorization or explicit consent; this typically involves a checkbox or a signing date entry that must be confirmed before submission.
False or incomplete declarations can result in penalties, interest, and potential reassessment.
Compliance extends beyond accurate reporting. It also involves maintaining adequate documentation to substantiate all entries on the form. Taxpayers are expected to retain records showing the nature, location, and cost of each foreign asset, as well as income earned or losses realized.
These records must generally be kept for at least six years. Proper certification and ongoing compliance help minimize audit risks and demonstrate due diligence in meeting Canada’s foreign reporting obligations, especially as the CRA continues to enhance data sharing with foreign tax authorities under international agreements.
Filing Methods and Deadlines
Form T1135 can be filed either electronically or by paper, depending on the taxpayer’s circumstances and preferences. Most individuals who file their T1 income tax return electronically using certified tax software can include the T1135 as part of that return. Corporations that file a T2 return electronically through the CRA’s Corporation Internet Filing system can do the same. Those who prefer paper filing can print and mail the completed T1135 directly to the tax centre that processes their income tax return.
The filing deadline for Form T1135 corresponds with the due date of the taxpayer’s annual income tax return. For individuals, this is typically April 30 of the following year, or June 15 if the individual or their spouse or common-law partner is self-employed. Corporations must file within six months of their fiscal year-end.
Late filing or failure to submit the form can trigger substantial penalties.
Practical Tips
- Keep detailed annual records of foreign investment holdings, including acquisition costs and country-specific details.
- Use the simplified reporting method if you qualify, but ensure all criteria are clearly met.
- Consult a tax advisor if you’ve ever owned foreign property jointly, or if you’ve disposed of assets during the year; the reporting obligations can be more complex in these cases.
Being proactive about compliance helps reduce CRA audit risk and avoid the onerous penalties detailed above.
CRA’s Voluntary Disclosures Program is a Lifeline for Fixing Previous T1135 Mistakes
If you failed to file or filed incorrect or incomplete T1135 forms in the past, all is not lost. You can use the CRA’s Voluntary Disclosures Program (VDP) to make up for past shortcomings in your filings and avoid penalties that would otherwise apply.
VDP rules underwent a major update, and all voluntary disclosures received after October 1, 2025, are subject to much easier rules than the previous regime. The VDP now allows more access, as it’s now easier to qualify. Relief provisions have also been clearly defined:
- Unprompted disclosures (which can include those made after receiving a general education letter): 100% penalty relief and 75% interest relief on taxes owing.
- Prompted disclosures (after receiving a request to update information by a specific date): up to 100% penalty relief and 25% interest relief on taxes owing.
However, CRA is also stepping up its enforcement on a large scale, so time is running out if you need to amend past returns. Call us to find out more.
There are specific preconditions that must be met to access this program and benefit from the penalty relief it offers, and given what’s at stake, a quick consultation with a CPA with extensive CRA voluntary disclosure experience is the safe and smart decision.
At Faris CPA, we’re always upfront about our fees and whether it’s worth your money to retain us for your VDP application package.
As experienced and licensed CPA tax consultants, we help our clients handle all tax and accounting issues. Give us a call today at 1 844 340 5771 to schedule an assessment.
Frequently Asked Questions About Filing CRA Form T1135
When is the deadline?
Form T1135 is due on the same date as your income tax return; typically April 30 for individuals and six months after year-end for corporations.
What happens if I miss the deadline?
Late filing can result in penalties of up to $2,500, with more severe consequences if non-compliance is deemed willful.
Do I need to file if I only held foreign securities in a Canadian brokerage account?
Yes, if the underlying assets qualify as specified foreign property, the reporting requirement applies regardless of the account’s location.
What is specified foreign property in Canada?
Specified foreign property is assets held outside Canada. Canadians are instructed to report income they have earned from both foreign and Canadian sources.
According to the CRA, specified foreign properties include bank accounts held abroad, shares of foreign corporations and debt securities. Canadian resident taxpayers must report and include this information when filing their tax returns.
How much foreign income is tax-free in Canada?
If you earned more than 10% outside Canada, you won’t be eligible to earn any tax-free income up to a total amount of $12,069.
Individual residents in Canada are subject to Canadian income tax on their worldwide income, regardless of where it is earned or where it is received, and they are eligible for a potential credit or deduction for foreign taxes paid on income derived from foreign sources.
Can you file Form T1135 electronically?
Yes, you can file Form T1135 electronically for 2015 and later tax years. Corporations can file the form electronically for 2014 and later tax years.
However, if you choose to paper-file Form T1135, you must either attach it to your paper-filed tax return or the partnership information return. If you need more space, attach a schedule to your form. It is a form that will show your returns from the previous years you have filed the tax returns.
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