T1135 Foreign Income Verification: $100K Threshold and What to Report

Key takeaways

• Canadian tax residents who hold specified foreign property with a total cost exceeding $100,000 CAD must file Form T1135
• The T1135 deadline is the same as your T1 return deadline (April 30 or June 15 for self-employed)
• Penalties for late filing start at $25 per day (minimum $100, maximum $2,500), plus a gross negligence penalty
• RRSPs, RRIFs, and TFSAs holding foreign securities do not require T1135 filing
• The simplified reporting method is available for foreign property with a cost between $100,000 and $250,000

Form T1135 (Foreign Income Verification Statement) is required for any Canadian tax resident who, at any point during the tax year, held specified foreign property with a total adjusted cost base exceeding $100,000 CAD. The threshold is cumulative across all foreign property — not per property or per country.

What is specified foreign property

Specified foreign property includes: funds held in foreign bank accounts, shares of foreign corporations, interests in foreign trusts, foreign real estate (other than property used exclusively in an active business), and most other property located outside Canada. It does not include: property used in an active business, personal-use property, RRSPs/RRIFs/TFSAs (even those holding foreign securities), shares of Canadian corporations listed on a designated stock exchange.

A U.S. S&P 500 index fund held directly in a non-registered account at a Canadian brokerage is specified foreign property. The same fund held inside a TFSA is not. Foreign real estate held as a vacation property is specified foreign property; a foreign investment property used in a business may qualify for the business exclusion.

Simplified vs. detailed reporting

Taxpayers with foreign property between $100,000 and $250,000 can use the simplified reporting method — listing each property only by category (e.g., "shares of non-resident corporations") rather than property by property. Those with foreign property above $250,000 must file the detailed form, listing each property with country, income earned, and gain or loss on disposition.

Penalties and voluntary disclosure

Late filing of T1135 carries a $25 per day penalty (max $2,500 in a year), plus a gross negligence penalty of 5% of the maximum fair market value of unreported foreign property during the year (minimum $2,500). The CRA's Voluntary Disclosures Program can provide penalty relief for prior year T1135 failures — but only if the CRA has not yet initiated an audit or inquiry.