T1135 Exemption for Your First Year as a Canadian Resident

If you've just moved to Canada and started building a life here, you've probably heard that Canadian tax residents have to report foreign property on Form T1135. What often gets missed is that the first year you become a Canadian resident is treated differently — and understanding why can save you from filing a form you don't actually need to submit yet.

This guide explains the newcomer exemption from T1135 reporting, who it applies to, and when it stops.

The Newcomer Exemption in Plain Terms

Generally, an individual is not required to file Form T1135 for the tax year in which they first became a resident of Canada for tax purposes. This is a well-established, long-standing feature of Canada's foreign-reporting regime — it isn't a temporary program and doesn't depend on figures that change from year to year.

In practice, this means that if you moved to Canada partway through a tax year and became a resident for the first time, you generally don't need to report the foreign property you held during that same year, even if its value would otherwise put you over the filing threshold.

Why the Exemption Exists

The logic is straightforward: someone arriving in Canada for the first time typically already holds foreign property acquired long before they had any connection to the Canadian tax system. Requiring immediate, full foreign-property disclosure the moment someone lands would create a heavy compliance burden for newcomers with no corresponding benefit to tax administration in that first transitional year.

What Counts as "Becoming a Resident" for This Purpose

Residency for Canadian tax purposes is a factual determination, not simply a matter of your immigration status. Relevant factors generally include:

• [ ] Where you maintain a home available to live in
• [ ] Where your spouse, partner, or dependants live
• [ ] Where you hold your primary social and economic ties — bank accounts, memberships, employment
• [ ] How much time you spend in Canada versus elsewhere

Because residency is fact-specific, someone can become a resident partway through a calendar year even without a single immigration landing date driving the analysis. Getting the residency start date right matters, because it's the year that determines your T1135 exemption. This is a tax-residency question, separate from your immigration status — if you also have status questions, that's a different legal track, covered on our Immigration Law page.

What Happens in Year Two

The exemption is specifically for the year residency begins. Starting with your second tax year as a Canadian resident, the normal T1135 filing rules apply in full — if the cost amount of your specified foreign property is at or above the applicable threshold, you need to file, using whichever of the simplified or detailed methods applies to your holdings that year.

This means the exemption buys you one year to get organized — gathering records on your foreign accounts, investments, and property — before ordinary reporting obligations begin.

Situations That Commonly Cause Confusion

Returning former residents. If you previously lived in Canada, left, and are now returning, the newcomer exemption applies to becoming a resident — the analysis can differ for someone re-establishing residency versus a true first-time newcomer. Confirm your specific situation rather than assuming the exemption applies.

Part-year residents who leave again the same year. If you become a resident and then cease to be one within the same calendar year, how the exemption interacts with that short period of residency should be confirmed with a professional rather than assumed.

Spouses with different immigration timelines. Each individual's T1135 obligations are assessed on their own residency history — one spouse becoming a resident earlier than the other doesn't automatically extend the exemption to both.

Frequently asked questions