Owning a rental condo abroad, holding shares in a foreign brokerage account, or keeping money in an overseas bank can all feel like a private matter between you and your bank. The CRA sees it differently. If the total cost of your foreign holdings crossed a certain line at any point last year, you owe the CRA a separate form, and missing it is one of the most expensive filing mistakes a Canadian taxpayer can make. What stings is that no tax is even owed on the form itself. The penalty comes purely from filing it late.
Your T1135 Is Due the Same Day as Your Tax Return
The T1135, formally called the Foreign Income Verification Statement, has the same due date as your income tax return. For most individuals, that means April 30. If you or your spouse are self-employed, you get until June 15. Corporations file the T1135 alongside their corporate return, which is due six months after the fiscal year end. Partnerships and trusts follow their own return deadlines.
The trap here is that the T1135 is filed separately from your regular return and is not automatically included in most tax software. It is entirely possible to file your taxes on time, feel completely finished, and still be late on this one.
The $100,000 Threshold Uses What You Paid
Whether you need to file at all comes down to a single threshold. If the total cost of your specified foreign property was more than $100,000 Canadian at any time during the year, you must file. Two words in that sentence carry enormous weight. Cost, not market value, is what counts. If you bought foreign shares years ago for $80,000 and they are worth $250,000 today, you are still under the threshold, because the CRA looks at what you paid, not what it grew into. And at any time means exactly that. If your holdings crossed $100,000 for even a single month and you sold everything before December 31, you still have to file.
What Counts as Foreign Property, and What Does Not
Specified foreign property covers more than most people expect. It includes funds in foreign bank accounts, shares of foreign companies even when held through a Canadian brokerage, shares of Canadian corporations held in a foreign brokerage account, foreign rental property, debt owed to you by non-residents, and interests in foreign trusts or partnerships. Cryptocurrency held outside Canada may also count.
Just as importantly, several things are excluded. Foreign investments held inside registered accounts like an RRSP, RRIF, TFSA, RESP, RDSP, or FHSA do not count. Neither do foreign securities held through Canadian mutual funds or Canadian ETFs. A US dollar account at a Canadian bank is not specified foreign property. And a foreign vacation home used mainly for your own personal enjoyment is generally excluded, though a property you rent out is a different story.
This is where good advice pays for itself, because the line between a personal-use property and an income-producing one, or between a Canadian-held fund and a foreign one, is not always obvious from a statement.
The Penalties Apply Even When You Owe No Tax
Here is what makes the T1135 unusual. It calculates no tax. You could owe the CRA nothing, file it two weeks late, and still be penalized. The standard penalty is $25 per day, with a minimum of $100 and a maximum of $2,500 for each year missed.
It gets worse from there. If the CRA decides the failure was made knowingly or amounts to gross negligence, the penalty climbs to $500 per month for up to 24 months, capped at $12,000. Ignore a formal demand from the CRA to file, and it rises again to $1,000 per month for up to 24 months, capped at $24,000. After 24 months, a further penalty of 5 percent of the cost of the foreign property can apply. Interest accrues on top of all of it.
A Late Form Can Reopen Your Entire Return
There is one more consequence that catches people off guard. If you fail to report income from foreign property and the T1135 is filed late or filled out incorrectly, the CRA gains an extra three years to reassess your return, extending the normal window from three years to six. That reassessment is not limited to the foreign holdings either. It opens the entire return.
Relying on Your Accountant Is Not a Defence
The courts have been blunt on this point. Assuming your accountant handled it is not a defence. Recent Tax Court decisions have made clear that the obligation to file sits with the taxpayer, and that simply trusting a preparer to have caught it does not shield you from penalties. Even genuine, unintentional errors and honest unawareness of the requirement have generally not been enough to win penalty relief.
That is a difficult standard, and it means the responsibility to know whether you have a filing obligation rests with you, even if someone else prepares your return.
If You Have Missed Past Filings, Move Before the CRA Does
If you realize you have missed T1135 filings in past years, do not simply file quietly and hope it goes unnoticed. The CRA’s Voluntary Disclosures Program exists for exactly this situation and may reduce or waive penalties and interest, but only if your disclosure is complete, voluntary, and made before the CRA contacts you about it. Once an audit or enforcement action begins, that door closes. Acting first, and quickly, is what preserves the option. It is the same principle behind dealing with back taxes in Canada, where the cost of waiting almost always exceeds the cost of acting.
Foreign holdings are one of the few areas where a filing you thought was minor can turn into thousands of dollars in penalties without a cent of tax ever being owed, and where a good-faith mistake earns no leniency. Working out whether you crossed the threshold, which of your assets actually count, and whether past years need to be corrected is exactly the kind of question worth putting in front of someone before the deadline, not after. Our tax preparation services cover foreign reporting obligations alongside your return, so nothing gets filed on time while something else quietly goes missing.
Book a quick call and we will help you work out where you stand.