Form T1135: The Foreign Income Verification Statement
Who must file, what counts as specified foreign property, the simplified and detailed methods, and the penalties for missing it
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Form T1135 is the annual information return Canadian residents file when the total cost of their specified foreign property exceeded C$100,000 at any time in the year. Specified foreign property includes foreign bank accounts, shares of non-Canadian corporations (even in a Canadian brokerage), and foreign investment real estate; it excludes U.S. retirement accounts and personal-use property.
On this page
Who must file?
Canadian resident individuals, corporations, trusts, and certain partnerships — anyone resident in Canada for tax purposes, including an American living in Canada, a returning Canadian, and a new immigrant (after their first year, which is exempt). The test is cost, not value (for property owned on arrival, cost is its fair market value when the person became resident): the total adjusted cost base of all specified foreign property, converted to Canadian dollars, exceeded C$100,000 at any point in the year — even for a day. A portfolio that has fallen in value but was bought for more than C$100,000 is still reportable; one bought for C$80,000 and now worth C$150,000 is not.
What is specified foreign property?
| Included | Excluded |
|---|---|
| Funds in foreign bank accounts | Property used mainly for personal use (a vacation home, a car abroad) |
| Shares of non-resident corporations — including U.S. stocks held in a Canadian brokerage account | Property used in an active business carried on outside Canada |
| Foreign bonds, debentures, and debts owed by non-residents | Interests in U.S. retirement plans — IRAs, 401(k)s, and similar registered plans |
| Interests in non-resident trusts acquired for consideration | Canadian mutual funds and Canadian-domiciled ETFs, even if they hold foreign securities |
| Real estate outside Canada held for rental or investment | Shares of a foreign affiliate (reported on Form T1134 instead) |
| Precious metals and cryptocurrency held outside Canada (crypto counts when held outside Canada; the CRA has not published form-level guidance) | Property held in registered plans (RRSP, RRIF, TFSA, RESP) |
| Interests in foreign partnerships (with a 90 percent non-resident test) | Personal-use foreign real estate |
The U.S. stocks in a Canadian brokerage account are the item most often missed: the account is Canadian, but the shares are of non-resident corporations, and their cost counts toward the C$100,000. The U.S. retirement plan exclusion is the item Americans in Canada most often misread the other way — a 401(k) is not reportable on T1135, though the IRA's distributions are taxable in Canada.
Simplified or detailed?
Two reporting methods. The simplified method (Part A) is available when the total cost of specified foreign property was under C$250,000 throughout the year: the taxpayer checks the types of property held, the top three countries by cost, the total income from all specified foreign property, and the total gain or loss on dispositions — no property-by-property detail. The detailed method (Part B) is required at C$250,000 or more of cost at any time in the year: each property (or each account, for securities held through a Canadian registered dealer, under the aggregate reporting option) is listed with its country, maximum cost during the year, cost at year-end, income, and gain or loss. The aggregate reporting option — available only for accounts with a Canadian registered securities dealer or trust company, and reported at fair market value — is what makes the detailed method manageable for an investor with dozens of U.S. stocks held through a Canadian broker: the account is reported as one line per country.
When and how is it filed?
With the income tax return, by the return's due date (April 30 for most individuals, June 15 for the self-employed), electronically or on paper. It is a separate form, not a schedule, and a return can be filed on time while the T1135 is late — the penalty runs on the form alone. First-year residents of Canada are exempt for the year they become resident.
What are the penalties?
C$25 per day late, to a maximum of C$2,500 per year. Where the failure is knowing or grossly negligent, C$500 a month up to C$12,000, doubling if the CRA demands the form and it still isn't filed — and after 24 months, an additional 5 percent of the property's cost. And a consequence more expensive than the penalty: the normal reassessment period for the year is extended by three years for any income from the unreported property — the CRA gets six years instead of three to reassess. The voluntary disclosures program is the route for taxpayers who discover years of unfiled T1135s.
The American in Canada
A U.S. citizen or green card holder living in Canada files T1135 for U.S. brokerage and bank accounts above the threshold (their 401(k) and IRA excluded) — and simultaneously files the FBAR and Form 8938 with the United States for their Canadian accounts. Two countries, two foreign-account regimes, mirror images: what is domestic on one side is foreign on the other. The Canadian TFSA and RESP are foreign accounts to the IRS; the U.S. brokerage account is specified foreign property to the CRA. This page and the FBAR and Form 8938 guide are read together by anyone in that position.
Worked example
An engineer moves from Seattle to Vancouver in March and becomes a Canadian resident. Year one: exempt from T1135. Year two: she holds a U.S. brokerage account (cost US$220,000 — about C$300,000), a U.S. checking account (C$12,000), a 401(k) (US$400,000 — excluded), and a condo in Seattle she rents out (cost US$350,000). Specified foreign property cost: about C$785,000 — the detailed method. She reports the U.S. brokerage account security by security (the aggregate option is only for accounts with a Canadian dealer), the checking account, and the condo (rental real estate — its address, cost, rental income). The 401(k) is omitted. Her T1135 is filed with her T1 by April 30. On the U.S. side she files the FBAR and Form 8938 for her new Canadian accounts. Her husband, who assumed the U.S. brokerage account "isn't foreign — it's in the U.S.," filed no T1135 for three years: C$2,500 a year in penalties, and the CRA's reassessment window on the brokerage income extended to six years.
Frequently asked questions
Who has to file T1135?
Canadian residents — individuals, corporations, trusts, and certain partnerships — whose specified foreign property had a total cost above C$100,000 at any time in the year. First-year residents are exempt.
Are U.S. stocks in a Canadian brokerage account specified foreign property?
Yes. Shares of non-resident corporations count regardless of where the account is held. Canadian mutual funds and Canadian-domiciled ETFs holding U.S. stocks do not.
Is a 401(k) or IRA reported on T1135?
No. Interests in U.S. retirement plans are excluded from specified foreign property. Their distributions are still taxable income in Canada.
What is the penalty for not filing T1135?
C$25 a day up to C$2,500 per year, more for knowing or grossly negligent failures, and a three-year extension of the CRA's reassessment period for income from the unreported property.
Official sources
The CRA states: “As long as you met the reporting requirement threshold of $100,000 at any time in the year, you must report on Form T1135 all specified foreign properties held during the year, even if you sold any or all of the property before the end of the year.” — Canada Revenue Agency, Questions and answers about Form T1135, https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/foreign-reporting/questions-answers-about-form-t1135.html
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our Canadian Tax Desk handles T1135 compliance for Americans and returning Canadians — specified foreign property inventories, the aggregate reporting option for Canadian dealer accounts, coordination with FBAR and Form 8938, and voluntary disclosures for unfiled years. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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