Voluntary Disclosure for Late or Missing Form T1135 in Canada

You held foreign property, such as an account or shares abroad, and never filed Form T1135. Late-filing penalties can add up, and you want to put things right before the CRA raises it.

This article explains how the Voluntary Disclosure Program, or VDP, may help, what the CRA expects and where relief stops. Whether you were required to file in a given year depends on your facts, so confirm that with a tax professional.

This article covers Canadian federal tax law, which applies in every province.

Can the VDP cover a missed T1135?

The CRA's guidance on Form T1135 says the VDP may be available if conditions are met, and that to qualify you must file a valid disclosure. Otherwise, penalties for failing to file by the deadline may be relieved only under the taxpayer relief provisions on written request.

The CRA also lists not reporting foreign income taxable in Canada, and not filing a return that is now a year late, among situations that may be eligible.

Relief you may receive

These are the normal levels. An application is generally unprompted if the CRA has not communicated with you about the issue, or if the only contact was a general education letter. It is generally prompted if it follows CRA communication identifying a specific error or setting a correction deadline, or follows third-party information.

If accepted, you are protected from prosecution for the disclosed information, and gross negligence penalties do not apply to it. Any tax owing must still be paid.

Conditions and limits

• The application must be voluntary and complete.
• It must involve interest, penalties or both.
• It must include information at least one year past the filing due date.
• It must include payment of the estimated tax owing or a request for a payment arrangement.
• It is not voluntary if an audit or investigation has started against you or a related taxpayer for the disclosed information.

Requests for relief on penalties or interest already assessed are generally not eligible, and neither are applications that produce a refund or no tax or penalties owing. If you already have a T1135 penalty assessed, ask a tax professional about the taxpayer relief provisions.

Relief is limited by the ten-calendar-year window in subsection 220(3.1) of the Income Tax Act, so older years may get reduced or no relief.

Reassessment period and records

For foreign property, the reassessment period is extended by three years if income from specified foreign property was not reported and Form T1135 was not filed, not filed on time, or filed inaccurately.

Supporting records generally cover the most recent six years, or ten years for assets or income located outside Canada. Years with no errors or omissions need not be included.

What to do next

• Confirm whether the CRA has contacted you about foreign property or started an audit.
• List each foreign asset and year, with statements showing the value and any income earned.
• Prepare the missing T1135 forms and any corrected returns for unreported foreign income.
• Complete Form RC199, sign it and include payment or a payment arrangement request.
• Submit once, by one method only.

If you are unsure, you can hold an anonymous, non-binding discussion with the CRA first. It is not an application.

Frequently asked questions