Who must file the T1135?
You must file Form T1135 (Foreign Income Verification Statement) if at any time during the tax year, the total cost of all your specified foreign property exceeded $100,000 CAD.
Key points:
- The threshold is based on cost (what you paid), not fair market value
- You must file if the total ever exceeded $100,000 during the year — even briefly
- The cost is in Canadian dollars (converted at purchase date exchange rate)
- This applies to individuals, corporations, trusts, and partnerships
The T1135 is due on the same date as your tax return (April 30 for most individuals, June 15 for self-employed).
What counts as specified foreign property?
Specified foreign property is broadly defined. Common examples:
| Included | Excluded |
|---|---|
| US stocks (AAPL, MSFT, etc.) in non-registered accounts | US stocks held in a TFSA, RRSP, RRIF, or RESP |
| US-listed ETFs (VTI, VOO, QQQ) | Canadian-listed ETFs (even if they hold foreign stocks, like VFV or XUU) |
| Foreign real estate (investment or rental, not personal-use) | Personal-use property (vacation home you don't rent out) |
| Foreign bank accounts | Property used in an active business |
| Foreign bonds and GICs | Property held in registered accounts |
| Shares of foreign corporations (private or public) | Shares of Canadian-resident corporations |
| Foreign mutual funds purchased directly | Canadian mutual funds that invest internationally |
The critical distinction: Canadian-listed ETFs (like VFV, XEF, XEC) that hold foreign stocks do NOT count. Only directly-held foreign property counts. If you buy VTI on the NYSE, it counts. If you buy VFV on the TSX, it does not.
The registered account exemption
Foreign property held inside registered accounts is fully exempt from T1135 reporting:
- TFSA — exempt
- RRSP / RRIF — exempt
- RESP — exempt
- FHSA — exempt
- LIRA / LIF — exempt
- DPSP — exempt
This means you could hold $500,000 in US stocks inside your RRSP and have no T1135 obligation for those holdings. Only your non-registered (taxable) account holdings count toward the $100,000 threshold.
Simplified vs. detailed reporting
The T1135 has two reporting methods:
Simplified method (cost between $100,000 and $250,000)
- Check boxes for which categories of property you hold
- Report total income by category
- No need to list individual properties
- Much less work
Detailed method (cost exceeds $250,000, or voluntary)
- List each property individually (name, country, cost, income, gain/loss)
- Report maximum cost during the year
- Report cost at year-end
- Report income earned and gains/losses realized
If your total cost is between $100,000 and $250,000, the simplified method saves significant time. Above $250,000, detailed reporting is mandatory.
Cost vs. fair market value: the key difference
The $100,000 threshold is based on cost — what you paid in Canadian dollars at the time of purchase. This is often confused with market value.
Example: You bought $80,000 USD worth of US stocks when the exchange rate was 1.35. Your cost in CAD is $108,000. You must file the T1135 even if the stocks later dropped to $60,000 USD in value.
Conversely, if you paid $70,000 CAD for stocks that are now worth $200,000 CAD in market value, you do NOT need to file (cost was under $100,000).
Timing matters: If your cost exceeded $100,000 at any point during the year (e.g., you bought more shares in March then sold in June), you still need to file for the full year.
Penalties for failing to file
The penalties for not filing the T1135 are severe:
- $25/day for each day late, up to a maximum of $2,500
- $500/month for each month late after 24 months (Gross negligence penalty: 5% of total cost + $500/month, up to 48 months)
- No time limit on reassessment: The CRA can reassess your return for any year where T1135 was not filed — the normal 3-year limitation period does not apply
The most dangerous penalty is the extended reassessment period. Without the T1135 filed, the CRA can audit your foreign income for any year, indefinitely.
Voluntary disclosure: If you missed filing in prior years, the CRA's Voluntary Disclosures Program (VDP) may waive penalties and interest. Apply before the CRA contacts you.
Common mistakes
- Forgetting to convert to CAD: The $100,000 threshold is in Canadian dollars. If you invested $80,000 USD at a rate of 1.35, your cost is $108,000 CAD — over the threshold.
- Ignoring currency fluctuations: Your cost in CAD is fixed at purchase. Even if the USD weakens later, your reported cost doesn't change.
- Counting Canadian-listed ETFs: VFV, XUU, ZSP and other Canadian-listed ETFs holding US stocks do NOT count. Only directly-held foreign property on foreign exchanges counts.
- Counting registered account holdings: TFSA and RRSP holdings are exempt. Only your non-registered (taxable) account matters.
- Not filing for the "in and out" year: If you briefly held $120,000 in cost then sold back to $80,000, you must still file for that year.
How this connects to Schedule 3 and Sched3
If you hold foreign property that triggers T1135, you likely also have:
- Foreign dividends — reported as income with a foreign tax credit (see our withholding tax calculator)
- Capital gains in USD — must be converted to CAD at the settlement-date rate for Schedule 3 (see our USD/CAD rate converter)
- ACB tracking in CAD — your cost base is in Canadian dollars regardless of purchase currency
Sched3 handles the CAD conversion and ACB tracking for your US holdings, making it easy to verify whether your total cost exceeds the $100,000 threshold.