If the total cost of your specified foreign property topped CAD $100,000 at any point in the year, you must file Form T1135 with your return — even if the property earned nothing and even if you already reported the income. The penalty for skipping it runs $25 a day.
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The obligation sits in section 233.3 of the Income Tax Act. It applies to Canadian resident individuals, corporations and most trusts, and to partnerships with Canadian resident members, where the total cost amount of specified foreign property exceeded CAD $100,000 at any time during the year. The form is due at the same time as your income tax return for the year.
The threshold is cost, not current market value, and not income. An apartment in Portugal you bought for CAD $90,000 that is now worth CAD $400,000 does not, on its own, trigger the form. A portfolio you paid CAD $110,000 for that has since fallen to CAD $60,000 does. Cost is measured in Canadian dollars using the exchange rate at the time you acquired the property.
It is measured per taxpayer, not per household. If you and your spouse jointly own a foreign property, each of you counts your own share against your own threshold. And it is aggregate — no single asset needs to be worth $100,000, only the total of them all. An individual generally does not have to file for the year they first became a resident of Canada.
In: funds held in foreign bank accounts, shares of non-resident corporations, debt owed to you by a non-resident, interests in non-resident trusts, foreign real estate held for investment or rental, precious metals and foreign currency held abroad, and — the one people miss most often — shares of foreign corporations held inside a Canadian brokerage account. Holding US stocks at a Canadian broker does not take them out of the rules.
Out: property held inside registered plans such as an RRSP or RRIF, personal-use property including a vacation home used mainly by you and your family, property used exclusively in an active business you carry on, and interests in foreign affiliates, which are reported on a different form. Foreign mutual funds and ETFs bought on a Canadian exchange in Canadian dollars are generally Canadian property, but check the fund's actual domicile rather than the ticker.
There are two ways to report. The simplified method applies where the total cost of your specified foreign property is between $100,000 and $250,000 and asks only for categories, countries and totals. Above $250,000 you must use the detailed method, which requires property-by-property reporting of maximum cost during the year, cost at year end, income, and gain or loss on disposition.
The basic late-filing penalty is the greater of $100 and $25 for each day the return is late, to a maximum of $2,500 — per year, per return. Where the failure is knowing or amounts to gross negligence, the penalty rises to $500 per month to a maximum of $12,000, less anything already assessed. The CRA applies these mechanically. It does not care that no tax was owing.
The quieter consequence matters more. Where a T1135 was not filed, or was filed with incorrect information, the CRA's normal reassessment period for the year is extended, so a year you assumed was closed stays open. That can expose unrelated items on the same return to review years later.
If you should have filed and did not, the Voluntary Disclosures Program is usually the route. Done properly and before the CRA contacts you, it can produce relief from penalties and partial interest relief. It has to be voluntary, complete, and involve a penalty that would otherwise apply. We can approach the CRA on a no-names basis first to test how a disclosure would be received before your identity is given.
Yes. T1135 is an information return about ownership, not an income return. The trigger is the cost of the property, full stop. A dormant foreign bank account, vacant land, or a losing portfolio all count toward the threshold and all have to be reported. This is the single most common reason people end up with a penalty: they reason that because there was nothing to tax, there was nothing to file. Reporting the foreign income on your T1 does not satisfy the T1135 requirement either — they are separate obligations.
No. Shares of non-resident corporations are specified foreign property regardless of where the account is. The rules do allow a practical shortcut for these: property held in an account with a Canadian registered securities dealer can be reported in aggregate by country rather than security by security, using the highest month-end market value during the year. That is a reporting simplification, not an exemption. If your broker's year-end statement shows a foreign content figure over $100,000 at cost, you file.
Only if it is not personal-use property. A home you and your family use as a vacation property is generally excluded. A foreign property held mainly to earn rent or for investment is included, and mixed use is a question of fact — if you rent it out most of the year and use it for two weeks, treat it as reportable. Where the answer is close, the safer course is to file, because filing when you did not have to costs nothing and not filing when you had to costs $25 a day.
Do not simply start filing this year and hope the past is invisible — the CRA receives foreign account data automatically under the Common Reporting Standard and from the United States under FATCA, so the gap is visible. The usual approach is a voluntary disclosure covering the open years, prepared with the supporting cost and income figures before anything is submitted. Get advice from a lawyer rather than an accountant at this stage: our file is privileged, an accountant's is not, and the CRA can compel the accountant's working papers.
Open your file tonight — a licensed Ontario lawyer will confirm everything with you by tomorrow.