T1135 Foreign Property Reporting: Who Must File, Penalties and the VDP

T1135 foreign property reporting is the Canadian rule that surprises more Indian-origin and American newcomers than any other. If you are a Canadian resident and, at any time in the year, you own foreign property that cost more than CAD $100,000 in total, you must file Form T1135, the Foreign Income Verification Statement, with your tax return. The form does not create tax; it tells the CRA what you hold abroad. The penalties for missing it, however, are heavy. This guide explains who must file, what counts, the two versions of the form, deadlines, penalties and how to fix past years.

T1135 foreign property reporting: who must file?

Canadian-resident individuals, corporations and certain trusts file if they own specified foreign property (SFP) costing more than $100,000 at any time in the year. Certain partnerships also file. Key points from the CRA:

• Cost, not fair market value. The threshold is based on the cost amount of the property, generally what you paid.
• Total, not per item. All your SFP adds up. A foreign brokerage account costing $40,000, Indian shares costing $50,000 and a $20,000 Indian fixed deposit (all in Canadian dollars) together exceed the threshold.
• Any time in the year. If your holdings went above $100,000 at any point, you file and report everything held during the year.
• Joint ventures and partnerships. A joint venture itself does not file T1135; certain partnerships holding more than $100,000 do.
• Newcomers. An individual does not have to file for the year in which he or she first became resident; in later years, cost is the fair market value on arrival.

What counts as specified foreign property?

The CRA's definition includes funds or intangible property held outside Canada, tangible property outside Canada and debts owed by non-residents. In practice that means:

For a property partly used personally, the CRA treats "primarily" as more than 50%. A four-unit building with three units rented for profit is not personal-use property. Shares in an Indian company held through a Canadian broker are still SFP, and the form allows aggregate country-by-country reporting in Category 7 for property held with a Canadian registered securities dealer or trust company. Plans such as a U.S. 401(k) or an Indian provident fund raise classification questions, so ask your Canadian CPA.

How to file Form T1135, step by step

1. List foreign assets at cost. For each account, security or property, record the country, the cost in Canadian dollars and the maximum cost during the year, plus the year-end cost.
2. Convert to Canadian dollars using a documented exchange rate; the Bank of Canada publishes daily and annual rates.
3. Pick Part A or Part B. Part A is a checklist by type of property for holdings between $100,000 and $250,000 all year; Part B asks for details of each property if you reached $250,000 at any time.
4. Report income and gains from each property with your regular return. T1135 reporting does not replace reporting foreign income.
5. File by the return's due date. Individuals can file by EFILE or NETFILE (available since the 2017 tax year), or on paper attached to the return or sent to the Winnipeg Tax Centre.
6. Keep records of cost, statements and exchange rates for at least six years.

Documents you need

• Year-end and peak-balance statements for each foreign account.
• Purchase deeds, share purchase records and valuations at arrival for newcomers.
• Foreign income and tax certificates, such as Indian interest certificates and U.S. 1099s.
• A schedule of exchange rates used and where they came from.

Deadlines and penalties

The form is due the same day as your return: April 30, or June 15 if you or your spouse is self-employed. Corporations have six months after their fiscal period ends.

The CRA's time limit to reassess can also be extended by three years when SFP income was not reported and the T1135 was not filed on time or contained a false statement or omission.

How to fix missed years: the Voluntary Disclosures Program

The CRA's updated VDP applies to applications received on or after October 1, 2025. A valid application is voluntary, includes information at least one year past its filing due date and includes an error or omission with interest or penalties, with supporting documents and payment or a payment arrangement for tax owing. For an unprompted application the CRA's policy gives 75% interest relief and 100% penalty relief. For a prompted application, such as after an education letter, relief is 25% of interest and up to 100% of penalties. If the income or assets are outside Canada, you include documents for the most recent ten years. The CRA excludes people under audit or investigation. The form is RC199. See our CRA voluntary disclosures guide.

Worked example: a Brampton investor

Gurpreet, a Canadian resident in Brampton, owns Indian bank deposits costing $60,000, Indian shares costing $45,000 and a Ludhiana flat rented to a tenant, which cost $95,000, all in Canadian dollars. The total is $200,000, above $100,000 and below $250,000, so he files Part A for the tax year. If he sold the flat and the total fell, he would still file for that year because the threshold was exceeded at some point. If he files 40 days late, the base penalty is $25 times 40, or $1,000. If he had skipped the form for several years, he would speak with his Canadian CPA about a voluntary disclosure.

If you also file in the U.S. or India

T1135 is one of three foreign-asset regimes. Compare the tests:

A Canadian resident who is also a U.S. person may need all of them. See our guide to foreign account reporting across FBAR, T1135 and Schedule FA, Canadian residents with India assets, the FBAR guide and the Schedule FA guide. Dates are compared on the foreign asset reporting deadlines page.

Mistakes to avoid

• Testing against market value instead of cost.
• Forgetting accounts that were open for only part of the year.
• Treating a rented Indian flat as personal-use property.
• Assuming a Canadian broker's custody removes foreign shares from the form.
• Missing newcomer relief and then missing the filing in year two.
• Waiting for a CRA letter before considering a voluntary disclosure.

How we can help

We are a U.S. CPA firm in Aurora, Illinois. We prepare the U.S. FBAR, Form 8938 and related forms for clients whose assets also trigger T1135, and we coordinate the asset list with your Canadian CPA and Indian Chartered Accountant so the three reports match. Your Canadian CPA prepares the T1135. See foreign account and asset reporting and cross-border tax services. More Canadian guides are on the Canada hub.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.