T1135 Foreign Property Reporting Canada 2026 — $100K Threshold, Penalties, and VDP

By Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA Professional Corporation, Mississauga, Ontario. Updated 2026-05-22.

Quick Answer

The T1135 foreign property reporting Canada 2026 obligation in one paragraph: Canadian-resident individuals, corporations, trusts, and partnerships that own specified foreign property with a total cost amount exceeding $100,000 CAD at any time in the tax year must file Form T1135 (Foreign Income Verification Statement) with their income tax return. The threshold is based on cost, not fair market value. Simplified reporting (Part A) applies when total cost is over $100,000 but under $250,000 throughout the year; detailed reporting (Part B) applies when total cost reaches $250,000 or more at any point. Penalties for non-compliance in 2026 are tiered: $25/day to a maximum of $2,500 for basic late filing, $500/month to a maximum of $12,000 for intentional non-compliance, $1,000/month to a maximum of $24,000 after a CRA demand to file, and as high as 5% of the cost of the foreign assets for sustained non-compliance beyond 24 months. The Voluntary Disclosures Program (VDP) is the standard relief mechanism for prior-year missed filings if filed before CRA contacts you. Specified foreign property includes funds in foreign bank accounts, foreign-listed shares (even if held in a Canadian brokerage account), interests in non-resident trusts, foreign rental real estate, and several other categories. Personal-use property (a vacation cottage held for the owner’s personal use) is excluded.

Who must file T1135

The filing obligation applies to a Canadian resident — for tax purposes — who at any time in the taxation year owned specified foreign property with a total cost amount exceeding $100,000 CAD. The four categories of filer:

Individuals (T1 filers). Includes Canadian-resident T1 filers with foreign assets through any vehicle other than registered plans (RRSPs, TFSAs, RPPs, RDSPs are excluded from T1135 reporting). The most common population is owner-managers with foreign-listed shares (U.S., U.K., European exchanges) held in a Canadian non-registered brokerage account, owners of foreign rental property, and snowbirds with U.S. bank accounts.

Corporations (T2 filers). Canadian-resident corporations with foreign holdings — typically holding companies, family offices, and operating companies with U.S. or other foreign subsidiaries. Note that T1135 is for direct holdings; equity interests in non-resident corporations may also trigger T1134 (controlled or non-controlled foreign affiliate reporting) on top of T1135. The two forms are not interchangeable.

Trusts (T3 filers). Canadian-resident inter vivos and testamentary trusts with specified foreign property holdings. The trustee files for the trust; beneficiaries do not file in respect of their beneficial interest unless they separately meet the threshold for property they own directly.

Partnerships (T5013 filers). Canadian partnerships (including limited partnerships) with foreign holdings. The partnership files; partners do not separately report their share. Note that joint ventures are generally not partnerships for T1135 purposes — joint owners report their pro rata share individually.

What counts as specified foreign property

The T1135 definition of specified foreign property is broader than most clients expect. The seven main categories:

Funds in foreign bank accounts and other foreign deposits. Includes USD chequing or savings accounts at U.S. banks, GBP or EUR accounts at European banks, brokerage account cash balances at U.S. brokerages.

Foreign-listed shares. Any share of a non-Canadian corporation, whether listed on a foreign exchange or held privately. Critical: shares of U.S.-listed corporations (Apple, Microsoft, Amazon, etc.) held in a Canadian brokerage account through a Canadian broker are still specified foreign property. The location of the brokerage does not change the foreign-issuer status of the underlying security.

Interests in non-resident corporations. Common and preferred shares of any non-resident corporation. Where the holding meets the controlled or non-controlled foreign affiliate definitions, T1134 may also be required.

Indebtedness owed by non-residents. Bonds, notes, mortgages, debentures, and other debt instruments issued by a non-resident person, including foreign-government bonds.

Interests in non-resident trusts. Including the equitable interest of a beneficiary, even where no income has been received.

Foreign real estate held for purposes other than personal use. A Florida rental property is specified foreign property. A Florida vacation home held strictly for personal use is excluded (although the line between “personal use” and “investment” can be audited).

Other foreign property. Including life insurance issued by a non-resident insurer, certain commodities and futures contracts on foreign exchanges, and intellectual property held abroad.

Excluded from T1135: personal-use property (a personal cottage in Florida or France), property held in a registered plan (RRSP, TFSA, RPP, RDSP, RESP, FHSA), and property used or held exclusively in an active business carried on by the taxpayer.

Simplified vs detailed reporting tiers

T1135 has two reporting tiers in 2026:

Part A — Simplified reporting. Available when total cost of specified foreign property exceeded $100,000 but was less than $250,000 at all times during the year. The taxpayer checks a box for each category of property owned, identifies the top three jurisdictions, and reports the highest cost amount during the year and total income for the year. No per-property detail required.

Part B — Detailed reporting. Required when total cost reached $250,000 or more at any time during the year. The taxpayer reports each property separately by category, including jurisdiction, maximum cost during the year, cost amount at year end, income for the year, and any gain or loss on disposition. For a typical owner-manager with a diversified U.S. portfolio in a non-registered Canadian brokerage account, this can run to dozens or hundreds of lines unless aggregated by broker statement (CRA accepts the brokerage-statement aggregation method for category 7 only).

The $250,000 threshold is a hard cliff. A taxpayer who is at $249,000 in November and $251,000 on December 15 files Part B for the full year. A taxpayer who was at $260,000 for ten days in March and $180,000 the rest of the year files Part B. This is one of the most common compliance mistakes.

Penalty structure for 2026

The penalty structure layers in severity:

Basic late filing. Failure to file T1135 by the due date results in a penalty of $25 per day, subject to a minimum penalty of $100, to a maximum of $2,500. The cap is reached at 100 days late.

Gross negligence or intentional non-compliance. Where the failure to file is determined to be a result of gross negligence or knowing failure to file, the penalty escalates to $500 per month, up to a maximum of $12,000 within one year of the original deadline. CRA invokes this where the taxpayer’s facts demonstrate awareness of the obligation (for example, a T1135 was filed in a prior year and the taxpayer simply stopped filing).

Failure to file after CRA demand. If CRA has issued a written demand to file the T1135 and the taxpayer still fails to file, the penalty increases to $1,000 per month, up to a maximum of $24,000.

Sustained non-compliance beyond 24 months. If non-compliance continues beyond 24 months after the due date, the penalty may be as high as 5% of the total cost of the foreign assets that should have been reported. For a $1,000,000 specified-foreign-property holding, that is a $50,000 penalty on top of the per-period penalties above.

Extended reassessment. Filing T1135 late or incorrectly opens an extended three-year reassessment window on the entire return — not just the T1135 — under subsection 152(4) of the Income Tax Act. CRA’s normal three-year reassessment period for individuals and CCPCs becomes effectively six years for tax years with a T1135 deficiency.

Voluntary Disclosures Program (VDP) relief

For taxpayers with missed T1135 filings in prior years, the Voluntary Disclosures Program is the standard relief path. CRA modernized the VDP effective October 1, 2025 under Information Circular IC00-1R7 — the program now uses a simpler two-track design that replaces the prior General Program and Limited Program framework. Applications filed on or after October 1, 2025 are assessed as Unprompted or Prompted:

Unprompted application — full relief track. Available where the CRA has not yet contacted you about the specific compliance issue and no audit or investigation has been initiated against you or a related taxpayer in respect of the information being disclosed. An unprompted T1135 disclosure may qualify for 100% relief from applicable penalties and 75% interest relief on the years included in the application. An education letter or general guidance notice from CRA does not, on its own, prompt the application.

Prompted application — partial relief track. Available where the CRA has communicated with you about an identified compliance issue (for example, a letter identifying a foreign-asset filing gap from third-party data) but no audit or investigation is yet underway. A prompted T1135 disclosure may qualify for up to 100% penalty relief and 25% interest relief. The “voluntary” requirement has been softened — disclosures are now generally treated as voluntary unless an audit or investigation has actually been initiated.

Conditions common to both tracks. The disclosure must be complete — all years for which T1135 was required must be filed together with any unreported foreign income. The lookback is typically the last six years, extended to ten years where the non-compliance involved foreign assets or foreign income (a T1135 file will normally use the ten-year window). A potential penalty must be present (late T1135 alone satisfies this). Tax owing plus any reduced interest must be paid or arranged. The simplified Form RC199 is used for the application.

A clean T1135 unprompted application covering several years of missed filings — where the underlying T1 income was correctly reported — typically settles with full penalty relief plus a partial interest reduction, for total professional and out-of-pocket cost in the $3,500 to $7,500 range depending on the complexity of the underlying property. The audit-driven assessment alternative on the same fact pattern, with sustained non-compliance penalties, can be ten times that.

Common filing errors

Five errors we see repeatedly in 2026 T1135 reviews:

Treating U.S. shares in a Canadian brokerage as Canadian property. They are not. A U.S. brokerage account is one trigger; a Canadian brokerage holding U.S. equities is the more common trigger and is widely missed.

Failing to aggregate across vehicles. A taxpayer with $80,000 of U.S. shares in a Canadian non-registered account and $50,000 in a U.S. brokerage account aggregates to $130,000 — over the threshold. Both vehicles must be considered.

Using fair market value instead of cost. The threshold is cost amount, not FMV. A property bought for $90,000 USD several years ago that is now worth $300,000 USD is still under threshold on cost if no further purchases occurred. (FMV is relevant for some Part B fields but not for the threshold determination.)

Missing the $250,000 cliff during the year. Highest cost during the year, not year-end cost, determines Part A vs Part B.

Excluding “joint with spouse” property. Each joint owner files for their pro rata share. If the share exceeds $100,000 for either owner, that owner files.

Frequently asked questions

I hold U.S. stocks in my Canadian RRSP. Do I file T1135? No. Property held in a registered plan (RRSP, TFSA, RPP, RDSP, RESP, FHSA) is excluded from T1135. Only non-registered holdings count toward the threshold.

My U.S. shares are in a Canadian brokerage account. Do I file? Yes if the total cost across all your specified foreign property exceeded $100,000 at any point. The location of the brokerage does not change the foreign-issuer status of the underlying security. This is the most-missed trigger in owner-manager practice.

I have a Florida condo that I use personally. Do I report it? No, if it is personal-use property — i.e., used by you, your family, or close personal relatives for personal purposes and not held for the purpose of earning income (rental or otherwise). The line is administered narrowly: short-term rental income from VRBO or Airbnb can convert the property into specified foreign property.

I missed filing T1135 for the last four years. What do I do? Apply through the Voluntary Disclosures Program (Form RC199) under IC00-1R7. If you file before CRA contacts you about the issue, the application is treated as an unprompted disclosure with 100% penalty relief and 75% interest relief. The alternative — CRA finding you first through audit or investigation — can include 5% of asset value plus extended reassessment with no penalty relief.

What is the difference between T1134 and T1135? T1135 reports specified foreign property holdings (the asset). T1134 reports income and assets of controlled and non-controlled foreign affiliates (foreign corporations you own or significantly influence). A non-resident corporation holding can trigger both, with different reporting thresholds and deadlines.

Does T1135 affect my regular Canadian tax owing? Not directly. T1135 is an information return. However, late or missing T1135 triggers an extended three-year reassessment window on your entire T1 return for that year, and CRA gross-negligence penalty exposure on any related unreported foreign income.

What if my total cost is exactly $100,000? Filing is required only if the cost amount exceeded $100,000. Exactly $100,000 is not over the threshold. In practice, the prudent advisor files at $100,000 to leave no audit ambiguity.

Case study: $9,200 VDP-applied penalty wipe for a Mississauga owner-manager, 2026

A Mississauga technology-services owner-manager held a diversified non-registered investment portfolio at a Canadian brokerage. The portfolio included U.S.-listed shares (Apple, Microsoft, Amazon, several U.S. ETFs) with a total cost of $385,000 USD at the end of 2021, growing to $510,000 USD by 2024 with additional purchases.

The client’s previous accountant — a competent T1 preparer with a domestic-only practice — had never asked about foreign holdings beyond the standard interview prompts. T1135 was never filed for 2021, 2022, or 2023.

In Q1 2026, during a referral engagement for restructuring advice, we identified the foreign holdings on the brokerage statement and confirmed they had crossed the $250,000 cost threshold every year since 2021.

Exposure analysis before VDP:

2021 T1135 (due April 30, 2022, four years late): Sustained non-compliance beyond 24 months — penalty up to 5% of $385,000 USD = $19,250 USD, plus $24,000 cap after a CRA demand had it been issued. Conservative penalty estimate $12,000.

2022 T1135 (due April 30, 2023, three years late): Same sustained non-compliance bracket — penalty in the $9,000–$12,000 range.

2023 T1135 (due April 30, 2024, two years late): Approaching the 24-month sustained non-compliance line. Penalty $5,000–$12,000.

Extended reassessment exposure: Each year T1135 was late opens a three-year extended reassessment on the entire T1 for unrelated tax positions.

Total CRA-found-you scenario: $26,000–$36,000 in penalties plus interest, plus exposure on the underlying T1.

VDP path executed:

Filed three T1135 returns for 2021, 2022, 2023 as an unprompted VDP application under IC00-1R7 on Form RC199, with detailed Part B disclosure for each year. Income on the foreign holdings was properly reported on the original T1s (the client had reported dividends and capital gains correctly; the omission was strictly T1135). VDP application emphasized this fact.

VDP was accepted under the unprompted track. Outcome: 100% penalty relief ($0 in penalties); 75% interest relief on the affected years (approximately $2,700 in interest savings).

Professional fees for the engagement: $4,400 (return preparation + VDP application + correspondence with CRA).

Net 2026 cost: approximately $4,400 vs $26,000–$36,000 alternative. Five-year compounded exposure if no action: another extended reassessment cycle and possibly criminal referral on the 5% sustained non-compliance penalty.

The client now files T1135 annually as part of the regular T1 engagement at no incremental cost.

Where to start

If you hold any foreign-issued securities (including U.S. shares in a Canadian brokerage), foreign bank accounts, foreign rental property, or interests in non-resident trusts, the first step is a 15-minute review of your year-end statements against the $100,000 cost threshold. If you crossed it in any prior year and did not file T1135, the second step is a VDP assessment before any other interaction with CRA.

Free 30-min T1135 review with a CPA, CA, LPA — fixed-fee quote in 48 hours on the historical return preparation and VDP application.

For related practical-tax topics, see the T1134 cross-border self-check for foreign-affiliate reporting and the CRA Voluntary Disclosures Program guide for the relief mechanism we apply here.