Foreign Property Reporting (T1135) in 2026: The $100,000 Threshold Explained

You opened a U.S. brokerage account.
You bought shares of Apple or Microsoft.
You inherited property overseas.

Then your accountant asks:

“Do you need to file Form T1135?”

Many Canadians misunderstand this rule.

It is not a tax on foreign property.

It is a reporting obligation.

And the penalty regime is severe.

Let us examine the $100,000 threshold clearly.

 

What Is Form T1135?

Form T1135 – Foreign Income Verification Statement is required under the foreign reporting provisions of the Income Tax Act.

It requires certain Canadian residents to disclose:

Specified foreign property if total cost amount exceeds $100,000 CAD at any time in the year.

This is not based on fair market value.

It is based on cost.

 

First Principle: The $100,000 Is a Cost Test

If the total cost amount of all specified foreign property exceeds $100,000 CAD at any point during the year:

You must file T1135.

Even if:

• The property produced no income
• The value later declined
• You sold it before year-end

The test is triggered at any time during the year.

 

What Is “Specified Foreign Property”?

Common examples include:

• Shares of foreign corporations held outside Canada
• U.S. brokerage accounts
• Foreign bank accounts
• Foreign rental real estate
• Interests in foreign trusts
• Foreign mutual funds held outside registered accounts

It does not include:

• Property used exclusively in an active business
• Personal-use property (e.g., vacation home not rented)
• Assets held in RRSPs, RRIFs, TFSAs, or certain registered plans

Classification matters.

 

Example Scenario

You hold:

• $70,000 in a U.S. brokerage account
• $40,000 in foreign ETFs

Total cost = $110,000.

Even if the market value drops to $95,000 later:

You must file T1135.

The threshold is based on historical cost.

 

What If Assets Are Sold Mid-Year?

If you exceeded $100,000 at any time during the year:

A T1135 filing is required — even if you held no foreign property at December 31.

Timing does not eliminate obligation.

 

Simplified vs. Detailed Reporting

If total cost is:

• Between $100,000 and $250,000 → Simplified reporting may apply.
• Above $250,000 → Detailed reporting is required.

Detailed reporting requires:

• Country-by-country breakdown
• Maximum cost during year
• Income generated
• Gain or loss on disposition

Recordkeeping must support these disclosures.

 

Penalties for Non-Filing

The penalty structure is significant.

Basic penalty:

• $25 per day
• Minimum $100
• Maximum $2,500

If CRA determines gross negligence:

Penalties escalate substantially.

Failure to file T1135 does not require tax owing.

It is a standalone reporting obligation.

 

Interaction With Foreign Income

T1135 is separate from:

• Reporting foreign income on T1
• Claiming foreign tax credits
• Exchange rate calculations

You may owe:

• Tax on foreign dividends
• Tax on foreign capital gains

T1135 does not calculate tax.

It reports assets.

 

Common Misunderstandings

“It’s based on market value.”
No — it is based on cost amount.

“If I didn’t earn income, I don’t need to file.”
Income is irrelevant to threshold test.

“It only applies to foreign real estate.”
Foreign securities frequently trigger the rule.

“My bank already reports to CRA.”
Reporting by institutions does not eliminate your filing obligation.

 

Currency Conversion

Foreign assets must be converted to Canadian dollars.

Cost amount should be determined using:

• Exchange rate at time of acquisition

Careless exchange conversion creates reporting inconsistencies.

 

Family-Owned Enterprise Considerations

Entrepreneurial families often hold:

• U.S. brokerage accounts
• Foreign holding companies
• Offshore real estate
• Cross-border investments

Foreign reporting interacts with:

• Estate planning
• Corporate structuring
• U.S. tax exposure
• Treaty analysis

Compliance must be coordinated.

 

Strategic Planning for 2026

Before filing:

• Aggregate total cost of all foreign property
• Confirm whether threshold exceeded at any time
• Determine simplified vs. detailed reporting
• Confirm foreign income inclusion
• Ensure exchange rate accuracy

T1135 compliance should be integrated into annual tax processes — not treated as an afterthought.

 

Final Thoughts

If the total cost of specified foreign property exceeds $100,000 at any time in the year, Form T1135 must be filed.

It is a reporting requirement — not a tax.

But penalties for non-compliance are meaningful.

For globally invested families and owner-managers, disciplined foreign reporting protects both capital and credibility.

At Shajani CPA, we integrate cross-border reporting, foreign income planning, and estate strategy with statutory precision.

Because global wealth requires global compliance.

Tell us your ambitions, and we will guide you there.

 

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2026 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.