The Foreign Income Verification Statement — Form T1135 — is one of the most overlooked filing requirements for Canadian investors. The penalties for a missed or late T1135 start at $25 per day and can reach $2,500 for a continued failure, with additional penalties for gross negligence. Many investors who trigger the requirement do not know they have triggered it.
This guide covers who needs to file, what assets count toward the threshold, and what the two reporting options look like in practice.
The $100,000 threshold — and when it is measured
You must file T1135 if the total cost amount of your specified foreign property exceeded $100,000 Canadian at any point during the tax year — not just at year-end.
This is the detail that catches investors. If your U.S. stock portfolio hit $105,000 CAD in July and dropped to $90,000 CAD by December 31, you still had to file T1135 for that year. The threshold test is applied continuously, not as a single year-end snapshot.
The amount is measured in cost, not market value. Cost is the original purchase price in Canadian dollars — your adjusted cost base for investments — not the current market value of the holdings.
What counts as specified foreign property
Specified foreign property (SFP) includes property you hold outside Canada. For investors, the most common categories are:
- Foreign shares held in a non-registered (taxable) account — U.S. stocks, ETFs listed on U.S. exchanges, international equities held directly
- Foreign bonds or fixed-income instruments in a taxable account
- Foreign real estate not used primarily for personal use
- Funds held in a foreign bank or brokerage account
The key qualifier is that the property must be held in a taxable account. Registered accounts (RRSP, TFSA, RRIF, RESP, FHSA) are explicitly excluded from T1135 reporting regardless of what foreign assets they contain.
What does not count
Several categories are commonly misunderstood:
Canadian-listed ETFs that hold foreign assets — An ETF listed on the TSX, such as one that tracks the S&P 500 or holds U.S. bonds, is Canadian property because you hold units of a Canadian fund. It does not count as specified foreign property, even if the underlying holdings are entirely foreign. This applies whether the ETF is currency-hedged or not.
Registered accounts — RRSP, TFSA, RRIF, RESP, and FHSA balances are never included in the T1135 calculation regardless of the assets held inside.
Personal use property outside Canada — A vacation property you use personally is generally excluded, though there are specific rules for property that is partly rented.
Foreign currency cash — Cash in a foreign currency held in a Canadian bank or brokerage account is typically treated as Canadian property for T1135 purposes unless it is in a foreign account.
Cost amount vs market value
The $100,000 threshold is based on cost amount, not current market value. For capital property such as U.S.-listed shares, adjusted cost base generally informs that amount. Express foreign-currency acquisitions in Canadian dollars using a documented rate applicable to the transaction and retain the source and date used.
This distinction matters in both directions. A portfolio that cost $95,000 CAD but is currently worth $130,000 CAD does not trigger T1135 in the current year (assuming it never crossed $100,000 at cost at any point during the year). A portfolio that cost $105,000 CAD but has declined to $80,000 CAD in market value still triggers T1135.
Simplified vs detailed reporting
If you are required to file T1135, you choose between two reporting levels:
Simplified method — Available if the total cost amount is under $250,000 throughout the year. You report the types of foreign property you hold (checked boxes by category) without identifying individual accounts or holdings.
Detailed method — Required if you held more than $250,000 at cost at any point in the year. You must report each property by country, the maximum cost during the year, the cost at year-end, and foreign income earned.
Most individual investors whose U.S. equity holdings are between $100,000 and $250,000 at cost will qualify for the simplified method. It requires far less information — essentially a categorization of what you held rather than a security-by-security inventory.
What happens if you miss the filing
The CRA can assess a penalty of $25 per day for each day the T1135 is late, up to a maximum of $2,500 per year. For properties that were deliberately not reported or where the cost is over $100,000, there are additional gross negligence penalties that can reach 5% of the maximum unreported cost.
The CRA has a Voluntary Disclosures Program (VDP) that can reduce penalties and waive interest for prior-year T1135 failures if you come forward before the CRA contacts you. If you discover you should have filed in a prior year, the VDP is worth reviewing with a tax advisor.
A quick check before filing season
Use the T1135 threshold tracker to enter your foreign holdings at cost and see whether you were above $100,000 at any point during the year. The tool shows your total cost in CAD and whether you approach or exceed either the $100,000 filing threshold or the $250,000 simplified-method limit.
If you are close to the threshold, the ACB records you maintain throughout the year are the foundation for both your capital gains calculation and your T1135 cost reporting. Accurate ACB records eliminate the need to reconstruct costs at tax time.
How ACB records support T1135 filing
The $100,000 threshold is measured using cost amount, not current market value, and it is expressed in Canadian dollars. For capital property such as U.S.-listed shares, adjusted cost base generally informs that cost amount. Preserve the documented exchange rate and applicable date for each acquisition rather than relying on current market value or a year-end rate. If the aggregate cost amount of specified foreign property approaches $100,000, review the complete T1135 rules and exclusions.
This connection between ACB and T1135 cost reporting is one reason accurate ACB records matter beyond capital gains alone. An investor who has underestimated their ACB due to missing purchase history or incorrect pooling may also be underestimating their T1135 cost amount — and may not realize they should have been filing.
Checking for prior year obligations
If you have held U.S. stocks in a taxable account for several years without checking the T1135 threshold, you may have missed filing obligations in prior years. The CRA’s Voluntary Disclosures Program (VDP) allows taxpayers to come forward before the CRA initiates contact. A successful VDP application can reduce or eliminate late-filing penalties and waive interest in some circumstances.
The lookback period for T1135 penalties is generally ten years for non-willful failures. If you believe you missed a filing in a prior year, reviewing the VDP option with a tax advisor before the CRA raises the issue is the recommended approach.
The TSX-listed ETF edge case explained
Canadian-listed ETFs from providers like Vanguard Canada or iShares Canada — ticker symbols such as VFV, XUS, ZSP — track U.S. indices but are listed on the TSX and structured as Canadian trusts. These are Canadian property for T1135 purposes, regardless of what their portfolios hold internally. They do not count toward the $100,000 threshold.
By contrast, ETFs purchased directly on U.S. exchanges (VOO, SPY, QQQ) are U.S.-listed foreign property and do count. The distinction is where the security is listed and the legal domicile of the fund, not what it holds. Investors who switched from direct U.S.-listed ETFs to equivalent Canadian-listed equivalents for simplicity may no longer have a T1135 filing requirement — which is one practical benefit of the TSX-listed structure.
For the related capital gains calculation, read USD stocks and capital gains in Canada and use the T1135 threshold tracker to check whether your foreign property cost crossed the filing threshold.
Frequently asked questions
Who needs to file a T1135?
Any Canadian resident whose specified foreign property had a total cost amount over $100,000 CAD at any point during the tax year must file Form T1135 — not just at year-end. The threshold is measured in cost, not market value, and applies to foreign shares, foreign bonds, and funds held in a foreign bank or brokerage account inside a taxable account.
Does a TSX-listed ETF that holds U.S. stocks count toward the T1135 threshold?
No. A Canadian-listed ETF such as VFV, XUS, or ZSP is Canadian property for T1135 purposes because you hold units of a Canadian trust, regardless of what the fund holds internally. Only securities listed directly on a foreign exchange — for example VOO or SPY bought on a U.S. exchange — count as specified foreign property.
What is the difference between the simplified and detailed T1135 methods?
The simplified method applies if your total cost amount stayed under $250,000 throughout the year — you report categories of foreign property held without listing individual holdings. The detailed method is required above $250,000 at cost at any point in the year, and requires reporting each property by country, maximum cost during the year, year-end cost, and foreign income earned.
What happens if I miss the T1135 filing deadline?
CRA can assess a penalty of $25 per day, up to $2,500 per year, with additional gross-negligence penalties of up to 5% of the maximum unreported cost in serious cases. If you missed a prior-year filing, the CRA’s Voluntary Disclosures Program can reduce or waive penalties and interest if you come forward before the CRA contacts you first.
General information only — not tax, legal, or financial advice. Consult a qualified professional for advice specific to your situation.
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