Form T1135: Do You Have to Report a Property Abroad From Ontario?

If you live in Ontario and own a condo, house or land in another country, you may wonder whether you must tell the Canada Revenue Agency about it every year. The answer depends mainly on what the property cost and how you use it.

This article walks through the $100,000 threshold, the personal-use exemption, the filing dates and the penalties. Your situation may have details that change the answer, so a lawyer or accountant can confirm.

When Form T1135 is required

Canadian residents, corporations and certain trusts must file Form T1135, Foreign Income Verification Statement, if they own specified foreign property costing more than $100,000 at any time in the year. The threshold is based on cost amount, generally the adjusted cost base, not fair market value.

Personal-use property is not reported

Specified foreign property does not include personal-use property as defined in section 54, such as a vacation home used mainly as a personal residence. It also excludes property used or held exclusively in carrying on an active business.

Renting changes the picture. In the CRA's Florida condo example, a condo used only as a vacation home is personal-use and is not reported, but the same condo rented for eight months with a reasonable expectation of profit is specified foreign property and must be reported. Part-year rental only to recover expenses, with no expectation of profit, is treated as personal use.

Income is taxable even below the threshold

Canadian residents must report all income earned from foreign property, whatever its cost amount. Falling below the T1135 threshold does not exempt that income from tax.

If you paid foreign tax on income you reported, you may be able to claim a federal foreign tax credit using Form T2209, and Form T2036 for the provincial credit.

Due dates and penalties

Form T1135 is due on the same date as the income tax return: on or before April 30 for most individuals and on or before June 15 for self-employed persons.

• Failure to file: $25 per day for up to 100 days, with a minimum of $100 and a maximum of $2,500.
• Knowing or grossly negligent failure: $500 per month for up to 24 months, to a maximum of $12,000.
• Failing to comply with a demand: $1,000 per month for up to 24 months, to a maximum of $24,000.
• After more than 24 months, the penalty is 5% of the property's cost.
• A false statement or omission: the greater of $24,000 and 5%.

The due-diligence exception in section 233.5 does not apply to T1135. The CRA's reassessment period is also extended by three years if you failed to report income from specified foreign property and the form was not filed, was filed late, or was filed inaccurately.

What to do next

• Find the cost amount of each foreign property, which is generally its adjusted cost base, since the $100,000 T1135 threshold is based on that and not on fair market value.
• Decide honestly how you use each property: personal, rental, or business.
• Total the cost of all specified foreign property you held during the year.
• Keep records of any foreign tax paid on income from the property.
• If you missed a filing, speak to a lawyer or accountant about how to correct it.

Frequently asked questions