Form T1135: Foreign Income Verification Statement, A Guide for Canadian Residents

Form T1135 — the Foreign Income Verification Statement — is a Canadian information return that requires eligible filers to report the details of specified foreign property they own. It is filed separately from your T1 income tax return and is due on the same date.

The CRA introduced T1135 as part of its efforts to identify unreported foreign income and ensure that Canadian residents with foreign assets are meeting their Canadian tax obligations. Over the past several years the CRA has significantly increased its focus on foreign asset reporting — including through international information sharing arrangements — making compliance more important than ever.

The form requires detailed cost information — not market value — about foreign accounts and assets, along with income or losses generated by those assets during the year. For assets held in certain Canadian brokerage accounts, fair market value information is required instead of cost.

A simplified reporting method is currently available for filers whose total specified foreign property cost less than $250,000 CAD — this method requires less detailed information and is significantly less time-consuming to complete. Filers above the $250,000 threshold must use the detailed method, which requires property-by-property reporting.

Form T1135 is required when all three of the following conditions are met:

1. The filer is a Canadian resident — this includes individuals, corporations, trusts, and certain partnerships. Note that the year of immigration to Canada is excluded — you are not required to file T1135 for the year you first became a Canadian resident.
2. The Canadian resident owns specified foreign property (see the next section for the definition).
3. The aggregate cost of all specified foreign property owned exceeded $100,000 CAD at any point during the tax year — even for a single day.

The $100,000 threshold is cumulative across all specified foreign property you own — it is not a per-account or per-asset threshold. If you own three foreign accounts with costs of $40,000, $35,000, and $30,000, the aggregate cost of $105,000 triggers the filing requirement even though no individual account exceeds the threshold.

Specified foreign property is broadly defined and covers most types of assets held or located outside Canada. Examples include:

• Funds or intangible property — including patents and copyrights — held outside of Canada
• Tangible property held outside of Canada
• Shares of a corporation not resident in Canada
• Shares of Canadian corporations held outside of Canada
• An interest in a non-resident trust
• An interest in a partnership that owns specified foreign property (unless the partnership itself is required to file T1135)
• Property that can be converted or exchanged for, or provides a right to acquire, specified foreign property
• Debt owed by a non-resident — including government and corporate bonds, debentures, mortgages, and notes receivable
• An interest in a foreign insurance policy
• Precious metals, gold certificates, and futures contracts held outside Canada

Not all foreign property triggers a T1135 filing obligation. The following categories are specifically excluded from the definition of specified foreign property:

• Property used or held exclusively in carrying on an active business
• A share of or indebtedness of a foreign affiliate
• An interest in certain exempt trusts as defined under subsection 233.2(1) — including certain employer-sponsored retirement plans and retirement or savings plans that are exempt from tax in their source country
• Personal-use property as defined in section 54 — including vacation homes and recreational properties used primarily for personal enjoyment
• An interest in or right to acquire any of the above exempt categories

The personal-use property exemption is worth noting for Canadians who own a vacation property in the United States or another country — if the property is used primarily for personal use rather than rental or investment, it is generally exempt from T1135 reporting. However, if the property generates rental income or is held primarily as an investment, it may be reportable. The distinction is fact-specific and worth confirming with your Tax Specialist.

Due date Form T1135 must be filed by the due date of your Canadian income tax return — April 30 for most individual filers, June 15 for self-employed individuals (though any tax owing is still due April 30). For partnerships, the due date is the date of the partnership’s information return.

How to file Form T1135 can be filed electronically or by mail. It is filed separately from your T1 return — it is not attached to or submitted with your income tax return. If filing by mail, send to:

Winnipeg Taxation Centre Data Assessment & Evaluation Programs Validation & Verification Section — Foreign Reporting Returns 66 Stapon Road Winnipeg MB R3C 3M2

Confirm the current mailing address with your Tax Specialist before mailing, as CRA processing centre assignments are subject to change.

Simplified vs. detailed reporting If the total cost of all your specified foreign property was less than $250,000 CAD throughout the entire tax year, you may use the simplified reporting method — which requires less detailed information for each property category. If the total cost exceeded $250,000 at any point during the year, you must use the detailed method, which requires property-by-property reporting including institution names, countries, and cost information for each asset.

The CRA takes T1135 non-compliance seriously. Penalties are assessed independently of any income tax owing and can become very significant for long periods of non-filing.

Failure to file:

• $25 per day, with a minimum penalty of $100 and a maximum of $2,500 (100 days) for standard late filing
• If the failure to file is due to gross negligence: $500 per month for up to 24 months ($12,000 maximum), minus any failure-to-file penalties already assessed
• After 24 months of non-filing: 5% of the cost of the specified foreign property that gave rise to the filing requirement, minus any other failure-to-file penalties already assessed

False statements or omissions:

• The greater of $24,000 or 5% of the cost of the specified foreign property to which the false statement or omission relates

Extended audit period: Failure to file T1135 also extends the period during which the CRA can examine your tax returns. This is an additional consequence beyond the financial penalties — it keeps prior years open to reassessment for longer than would otherwise apply.

If you were required to file T1135 in prior years but did not, you are not alone — and there is a structured path to coming into compliance before the CRA contacts you.

The CRA’s Voluntary Disclosures Program (VDP) allows taxpayers to come forward voluntarily to correct past non-compliance — including missing T1135 filings — in exchange for relief from some or all of the penalties that would otherwise apply. To be eligible for the VDP, the CRA must not have already contacted you about the unfiled returns or initiated an audit.

The VDP process involves submitting a disclosure that identifies the years and forms at issue, provides the required information, and pays any tax owing. The penalty relief available depends on the circumstances — including whether the non-compliance was due to simple oversight or more serious negligence.

If you have missed T1135 filings, contact AET before taking any action. A consultation is the right first step to assess your exposure and determine whether the VDP is the appropriate path.

The information required varies by asset type. For each category of specified foreign property you own, gather the following:

Foreign currency and bank accounts

• Name of the financial institution
• Country where the account is located
• Highest balance during the tax year (in CAD)
• Balance on December 31 of the tax year (in CAD)

Shares in a non-Canadian corporation

• Name of the corporation
• Country where the corporation is located
• Highest cost during the tax year (in CAD)
• Cost on December 31 of the tax year (in CAD)

Amounts owed to you by a non-resident of Canada

• Description of the indebtedness
• Country where located
• Maximum cost during the tax year (in CAD)
• Cost on December 31 of the tax year (in CAD)

Foreign trusts

• Name of the trust
• Country where located
• Highest cost during the tax year (in CAD)
• Cost on December 31 of the tax year (in CAD)

Real property held outside Canada

• Description of the property
• Country where located
• Highest cost during the tax year (in CAD)
• Cost on December 31 of the tax year (in CAD)

Other foreign property

• Description of the property
• Country where located
• Highest cost during the tax year (in CAD)
• Cost on December 31 of the tax year (in CAD)

Property held in accounts with Canadian brokerages or trust companies (for which you receive T3 or T5 slips)

• Name of the brokerage or trust company
• Country where the property is located
• Highest fair market value during the tax year (in CAD)
• Fair market value on December 31 of the tax year (in CAD)

Note: for most categories, T1135 reporting uses cost — not market value. Keep records of the original cost of your foreign property in CAD, as this information is not always easy to reconstruct after the fact.