T1135 Foreign Property Reporting: What It Is and Who Must File

What is T1135 foreign property reporting?

T1135 foreign property reporting is an annual filing requirement with the Canada Revenue Agency (CRA). It applies to Canadian residents who own or hold specified foreign property with a total cost above a set threshold. The T1135 form is used to disclose these holdings.

The form is not a tax return by itself. It is an information return that accompanies your personal income tax return. It helps the CRA cross-check foreign income you report, such as interest, dividends, or capital gains.

The rule applies to individuals, corporations, and trusts. The threshold is generally CAD 100,000 in total cost at any time during the year. Cost is the adjusted cost base, not the current market value.

Where the term comes from and how it is used

The term T1135 comes from the Canada Revenue Agency's form numbering system. Forms starting with T are tax forms. The T1135 is officially titled Statement of Specified Foreign Property.

In accounting and tax preparation, T1135 reporting is a standard compliance step for clients with foreign assets. In personal finance, it is a reminder to track foreign accounts, stocks, and other property.

The term is sometimes confused with T1134, which is an information return for non-residents. T1135 is for Canadian residents reporting foreign property.

Related terms: reporting, remitting, and paying

Reporting means disclosing information to a government agency. Remitting means sending a payment to a government agency, such as payroll remittance to the CRA. Paying is the broader act of giving money.

A transfer is the movement of money between accounts. An international remittance is a transfer sent across borders. T1135 reporting is about disclosure, not about sending money.

However, the two can overlap. If you send money abroad and it sits in a foreign account above the threshold, you may need to file T1135. The act of sending is a remittance; the account balance triggers reporting.

Examples in Canadian contexts

Payroll remittance: An employer withholds income tax, CPP, and EI from wages and remits them to the CRA. This is a payment, not a T1135 filing.

Invoice remittance: A business pays a supplier by bank transfer. This is a payment. It does not trigger T1135 unless it creates foreign property.

International remittance: You send money to a family member abroad. If you keep funds in a foreign bank account, foreign stocks, or other specified property with a cost above the threshold, you must file T1135.

Example: You hold a bank account in another country with a cost of CAD 120,000 throughout the year. You must file T1135 with your tax return. The account is specified foreign property.

Why T1135 reporting matters

Filing T1135 is a legal requirement. Failure to file can lead to penalties, interest, and increased scrutiny from the CRA. The CRA can also reassess your return.

The form helps the CRA verify that you are reporting all foreign income. It also supports claims for foreign tax credits. Accurate reporting reduces the risk of audits and disputes.

For newcomers to Canada, T1135 reporting is often a new concept. It applies once you become a resident for tax purposes. It does not apply to property held in registered accounts like RRSPs or TFSAs.

Common confusions

A common confusion is thinking T1135 is a tax. It is an information return. You do not pay tax just because you file it. You pay tax on income the property earns.

Another confusion is that T1135 only applies to bank accounts. It also applies to foreign stocks, bonds, mutual funds, and real estate not used for personal purposes. It can also apply to interests in foreign trusts.

Some people think T1135 applies only to individuals. It also applies to corporations and trusts. The threshold and rules are similar but can differ.

Finally, people confuse T1135 with foreign income reporting. You report foreign income on your tax return. T1135 is a separate disclosure of the property itself.

How to file and keep records

You file T1135 with your T1 income tax return. The deadline is the same as your tax return deadline. If you are self-employed, your deadline may be later.

Keep records of the cost, date of acquisition, and any income earned. Use the Bank of Canada daily exchange rates to convert foreign currency amounts to Canadian dollars.

You can file electronically or on paper. The CRA provides instructions for completing the form. If you are unsure, consider consulting a qualified tax professional.