- CRA's specified foreign property category is broad by design.
- Some categories of foreign-connected property are specifically carved out of the T1135 calculation: - [ ] Property used or held exclusively in the course of carrying on an active…
- The personal-use property exclusion is one of the most misunderstood parts of the form.
Every year, Canadians who hold enough foreign investments and assets have to file Form T1135, the Foreign Income Verification Statement. The form itself is straightforward once you know what belongs on it — the harder question is specified foreign property: which of your holdings actually count, and which ones CRA specifically excludes from the calculation.
Getting this wrong in either direction causes problems. Under-reporting can mean CRA later flags your return over a foreign-property discrepancy. Over-reporting means unnecessary paperwork and, in some cases, needless worry about a filing obligation you never actually had. This article walks through the categories CRA treats as specified foreign property and the exclusions people most often overlook.
Property That Generally Counts
CRA's specified foreign property category is broad by design. It generally includes:
- Funds or bank accounts held outside Canada, including foreign-currency accounts at a foreign branch of a Canadian bank
- Shares of non-resident corporations held outside a Canadian registered account, even a handful of shares in a well-known foreign public company
- Interests in non-resident trusts that you've contributed to or are a beneficiary of
- Debt owed to you by a non-resident, such as a loan you made to a foreign individual or company
- Real property situated outside Canada, other than property used mainly for personal enjoyment or used in an active business
- Interests in foreign mutual funds or investment entities
- Precious metals, gold certificates, and futures contracts held outside Canada
If you're not sure whether a particular holding fits one of these categories, describing the asset to a professional and letting them classify it is far safer than guessing.
What's Generally Excluded
Some categories of foreign-connected property are specifically carved out of the T1135 calculation:
- [ ] Property used or held exclusively in the course of carrying on an active business
- [ ] Personal-use property, such as a vacation property outside Canada used mainly by you and your family, rather than held for rental income or investment
- [ ] Holdings inside Canadian registered plans, such as RRSPs, RRIFs, and TFSAs, even when those plans hold foreign investments
- [ ] Shares of foreign affiliates, which are reported on a different, more detailed information return
- [ ] Property held through a Canadian mutual fund trust or corporation you hold units or shares in — you don't look through the fund to its own foreign holdings
Why the "Personal Use" Exclusion Trips People Up
The personal-use property exclusion is one of the most misunderstood parts of the form. A vacation condo in another country that you and your family use for holidays generally falls outside specified foreign property. But the moment you start renting it out — even occasionally, even just to help cover costs — it can shift into investment or income-producing territory, bringing it back into scope. If your use of a foreign property has changed over the years, don't assume last year's exclusion still applies this year.
Aggregation, Not Isolation
One of the most important things to understand is that specified foreign property isn't assessed account by account or asset by asset. CRA looks at the combined cost amount of everything that counts, added together, to determine whether you've crossed the filing threshold for the year. A handful of foreign holdings that each look modest on their own can add up to a filing obligation once combined. If you'd like more detail on how that combined calculation works, ask a lawyer online for a starting point.
A Quick Self-Check
Ask yourself these questions before assuming you don't need to file:
- Do I hold any bank accounts, brokerage accounts, or investment accounts outside Canada, outside a Canadian registered plan?
- Do I own shares in any foreign company directly, rather than through a Canadian mutual fund?
- Have I lent money to, or am I owed money by, anyone who isn't a Canadian resident?
- Do I have an interest in a trust set up outside Canada?
- Do I own real estate outside Canada that generates rental income, or that I don't use mainly for personal enjoyment?
If you answered yes to any of these, it's worth having a professional confirm whether your combined holdings cross the reporting threshold.
Frequently asked questions
Does my TFSA holding foreign stocks count toward T1135?
No. Property held inside a registered plan like a TFSA, RRSP, or RRIF is excluded from the T1135 calculation even if the underlying investments are foreign, because reporting works differently for registered accounts.
I inherited foreign shares this year — do they count?
Generally, yes. Once you own foreign shares directly, outside a Canadian registered plan, they count the same way as if you'd purchased them yourself, based on their cost amount to you.
Does a foreign pension I'm entitled to but haven't received count?
This depends heavily on how the pension or plan is structured. Some foreign pension interests are treated differently than direct property ownership. This is a case where getting specific advice matters, rather than assuming either way.
What if I'm not sure whether my foreign real estate is "personal use" or investment property?
Look at how the property has actually been used during the year, not how you intend to use it in future. Mixed personal and rental use can be especially tricky to classify, and it's worth documenting your actual use pattern in case CRA asks.
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