Reporting Foreign Assets (T1135)

Understanding reporting foreign assets T1135 is essential for individuals, corporations, investors, real estate owners, crypto traders, and anyone with financial ties outside Canada. The T1135, also called the Foreign Income Verification Statement, is one of the most heavily audited forms by CRA. It is required when a taxpayer owns specified foreign property with a total cost of more than $100,000 CAD at any time during the year. The penalties for failing to file are extremely high — and CRA uses international information-sharing programs to verify accuracy. This guide explains everything you need to know about reporting foreign assets T1135, who must file, what qualifies as foreign property, and how to avoid CRA reassessments.

Legal and Regulatory Framework
Reporting foreign assets T1135 is governed by the Income Tax Act, CRA foreign reporting rules, global tax transparency agreements (FATCA, CRS, OECD reporting), Form T1135 requirements, foreign affiliate rules, crypto asset classification rules, and Québec foreign disclosure under the Taxation Act. CRA enforces strict filing rules and cross-checks data with foreign banks, brokerage firms, crypto exchanges, and tax authorities worldwide.

Who Must File T1135?
You must file T1135 if you are a Canadian resident and at any point during the year your total cost of specified foreign property exceeded $100,000 CAD. This includes:
individual taxpayers
corporations
trusts
partners in partnerships
spouses with joint ownership
estate trusts receiving foreign inheritances
Non-residents do not file T1135 unless they return to Canadian residency.

What Counts as “Specified Foreign Property”?
Specified foreign property includes:
foreign bank accounts
foreign non-registered investment accounts
shares of foreign corporations (Apple, Amazon, Google, etc.)
Canadian mutual funds that hold foreign stocks (only in some cases, depending on classification)
U.S. or international rental properties
foreign partnership interests
foreign trusts and offshore holdings
foreign business shares
foreign cryptocurrency held on non-Canadian exchanges
non-Canadian bonds, ETFs, REITs, and funds
Crypto held on platforms outside Canada counts as foreign property. CRA has confirmed this.

What Is NOT Considered Foreign Property?
Not included under T1135:
property used for personal use (vacation homes you use personally)
foreign property held in RRSPs, RRIFs, TFSAs, RESPs, or RDSPs
foreign personal-use vehicles
foreign personal jewelry or art
Canadian securities held in a foreign brokerage
Foreign vacation homes are excluded only if not rented or used to generate income. The moment you rent the property, even for one month, it becomes specified foreign property.

Two Methods of Reporting: Simplified vs. Detailed
If your foreign assets exceed $100,000 but are under $250,000, you may use the simplified method. If they exceed $250,000, you must use the detailed reporting method. The simplified method only requires listing asset categories; the detailed method requires granular disclosure of each asset, maximum value during the year, cost base, income generated, and gains or losses.

Rental Properties Outside Canada
Foreign rental properties must be reported at cost, not market value. Income must be reported on your Canadian tax return even if taxes were paid abroad. Foreign tax credits may apply. You must provide:
address of the property
cost amount
income or loss
maximum value during the year
Foreign rental property is one of the most common causes of T1135 audits.

Foreign Stocks and Brokerage Accounts
Shares of foreign corporations held in a Canadian brokerage count as foreign property. CRA requires the cost base of each holding. This includes U.S. stocks, European stocks, ETFs investing in non-Canadian issuers, and ADRs. Foreign mutual funds and PFICs may require special reporting if income is not properly categorized.

Cryptocurrency on Foreign Exchanges
Crypto held on platforms outside Canada, such as Binance, Coinbase, Kraken, or Crypto.com, is considered specified foreign property. Crypto held in a private cold wallet may or may not be foreign property depending on the platform through which coins were acquired. CRA audits crypto reporting aggressively.

The $100,000 Threshold Explained
The $100,000 threshold is based on cost, not market value. For example:
Buy $60,000 of Apple stock + $50,000 of Tesla stock = $110,000
You must file T1135 even if the value drops later.

Penalties for Not Filing T1135
Failure to file or late filing penalties include:
$25 per day (minimum $100, maximum $2,500)
gross negligence penalties of $500 per month up to $12,000
additional penalties for false statements
extended CRA reassessment period (from 3 years to 6 years)
CRA can reassess years later if T1135 is missing or incorrect.
Penalties apply even if no income was earned.

Québec Foreign Asset Reporting
Québec does not have its own T1135-equivalent form, but Québec requires reporting foreign property income and applies harsh penalties for non-disclosure. Québec also audits crypto, foreign real estate, and U.S. investment accounts aggressively.

Common Mistakes in T1135 Filing
Common errors include reporting market value instead of cost, forgetting foreign crypto, ignoring joint accounts, failing to classify brokerage assets correctly, misreporting ETF compositions, failing to report rental property abroad, thinking U.S. stocks in a Canadian brokerage are exempt, not tracking ACB properly, and filing the T1135 late. These mistakes often lead to CRA reassessment.

Key Court Decisions
Courts uphold CRA’s right to impose penalties even when errors are unintentional. Courts confirm that foreign property must be reported based on cost, not personal interpretations. In crypto-related cases, courts support CRA’s classification of foreign exchange–held crypto as property requiring disclosure. Courts also highlight the importance of accurate beneficiary and trust reporting when foreign assets are involved.

Why CRA Audits Foreign Asset Holders
CRA audits T1135 filings because foreign assets are high risk for:
unreported income
capital gains not reported
offshore non-compliance
crypto transactions
rental income abroad
foreign corporation ownership
unreported U.S. brokerage accounts
CRA receives information through FATCA, CRS, and foreign banks — making non-disclosure nearly impossible.

Mackisen Strategy
Mackisen CPA ensures full compliance with reporting foreign assets T1135. We calculate cost bases, classify foreign assets, review brokerage statements, identify foreign property inside corporate or trust structures, prepare detailed T1135 filings, analyze foreign tax credits, report crypto and U.S. real estate income, and defend clients during CRA audits. We also assist Québec residents with cross-border reporting and income sourcing.

Real Client Experience
A Montréal investor forgot to report a U.S. brokerage account for 3 years. CRA issued late-filing penalties. Mackisen corrected filings and negotiated penalty relief. A client with crypto on foreign exchanges did not file T1135; we filed voluntary disclosures to prevent penalties. Another client inherited a rental property abroad and needed T1135 and foreign tax credit filings; we handled all compliance. A business owner failed to report shares of a foreign affiliate; we prepared T1135 and Form T1134 to resolve exposure.

Common Questions
Do I need to file T1135 if I own U.S. stocks? Yes, if total cost exceeds $100,000.
Does crypto count as foreign property? Yes, if held on non-Canadian platforms.
Do I report foreign real estate? Yes, if rented or used for income.
Are RRSPs, RRIFs, TFSAs exempt? Yes, registered accounts are excluded.
What if I filed late? Penalties apply, but relief may be possible.
Is the threshold based on cost or market value? Cost.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps Canadians comply with reporting foreign assets T1135 accurately, avoid penalties, and stay audit-proof. Whether dealing with crypto, foreign rental property, U.S. brokerage accounts, or cross-border holdings, our expert team ensures precision, compliance, and full CRA protection.