- You must file Form T1135 if the specified foreign property you own cost more than $100,000 at any time in the year.
- The $100,000 threshold is based on cost, not on what the property is worth today.
- A vacation home used mainly as a personal residence is personal-use property and is not specified foreign property, but renting it can change that.
If you live in Ontario and own a house, condo, bank account or investments outside Canada, you may have heard about a form called T1135. Whether you must file it turns on one question: do you own specified foreign property above a certain cost?
The label sounds technical, but the practical test is manageable. This article explains the threshold, what is left out, and what can go wrong if you miss the filing. Your own holdings may raise details that an accountant or lawyer should confirm.
Who has to file Form T1135
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 simplified Part A applies if the total cost was more than $100,000 but less than $250,000 throughout the year, and the detailed Part B applies at $250,000 or more. Whether any tax is owing on income from those holdings depends on your situation, so it is worth confirming with an accountant or lawyer.
The form is due on the same date as your income tax return. That is on or before April 30 for most individuals and on or before June 15 for self-employed persons. Corporations must file no later than six months after the end of the fiscal period.
The $100,000 test uses cost, not market value
The threshold is based on the cost amount, which is generally the adjusted cost base, and not on fair market value. A property that has doubled in value may still be under the line, and one that has dropped in value may still be over it.
The amount of cost also decides which part of the form applies.
| Total cost throughout the year | Which part of T1135 |
|---|---|
| More than $100,000 but less than $250,000 | Simplified Part A |
| $250,000 or more | Detailed Part B |
Whether a particular account or investment counts as specified foreign property depends on what it is and how it is held. If you are close to the threshold, have several holdings, or are unsure about one of them, an accountant or lawyer can help you sort them.
What is left out: personal-use and active business property
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.
This exclusion is why many Ontario owners of a foreign vacation home never file a T1135. But the way you use the home matters, as the CRA's Florida condo example shows:
- A condo used only as a vacation home is personal-use property and is not reported on T1135.
- 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.
Staying under the threshold does not hide the income
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 in Canada, you may be able to claim a federal foreign tax credit on line 40500 using Form T2209, and Form T2036 for the provincial credit.
What a missed filing can cost
The penalties for foreign reporting are steeper than many people expect. A failure to file is $25 per day for up to 100 days, with a minimum of $100 and a maximum of $2,500. A knowing or grossly negligent failure is $500 per month for up to 24 months, to a maximum of $12,000.
Other penalties are higher still, and the due-diligence exception in section 233.5 does not apply to T1135. A late, missing or inaccurate form can also extend the CRA's reassessment period by three years if you failed to report income from specified foreign property.
What to do next
- List every property and account you own outside Canada, with its original cost in Canadian dollars.
- Separate anything used mainly for personal use from anything rented or held to earn income.
- Check whether the total cost went over $100,000 at any point in the year, not just at year-end.
- Note your filing date: April 30 for most individuals, June 15 if you are self-employed.
- If you have missed past years, speak with an accountant or lawyer before the CRA contacts you.
Frequently asked questions
Do I report a vacation home abroad on T1135?
Not if it is personal-use property, such as a vacation home used mainly as a personal residence. If you rent it with a reasonable expectation of profit, it can become specified foreign property.
Is the $100,000 based on what my property is worth now?
No. It is based on the cost amount, which is generally the adjusted cost base, not fair market value.
If I do not need to file T1135, do I still report foreign income?
Yes. Canadian residents must report all income earned from foreign property, whatever its cost amount.
What happens if I file T1135 late?
A late filing can bring penalties, starting at $25 per day for up to 100 days, with a $100 minimum and a $2,500 maximum. It can also extend the CRA's reassessment period by three years where foreign income went unreported.
Sources
- CRA – Foreign Income Verification Statement (T1135) — canada.ca
- CRA – Questions and answers about Form T1135 — canada.ca
- CRA – Table of penalties (foreign reporting) — canada.ca
- CRA – Line 40500 Federal foreign tax credit — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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