Do I still file T1135 if my foreign property lost value?
Yes, if the cost amount of your specified foreign property went over the reporting threshold at any time in the year. The test is what the property cost, not what it is worth now, so a portfolio that has fallen since you bought it can still put you over. This catches people who check their statements in December, see a lower balance, and conclude there is nothing to report. Work from the purchase records rather than from the current valuation, and keep the supporting documents with the return.
Does the mortgage on my overseas flat reduce what I report?
No. The measure is the cost amount of the property, not your equity in it, so a flat bought with borrowed money counts at what it cost and the outstanding loan does not come off. A paid-off apartment abroad and a mortgaged one of the same cost sit in the aggregate at the same figure. People often assume the form is asking what they own net of debt, and answer a question it never asked. Where the debt matters is in the income calculation on any rent, not in the reporting test.
Do foreign shares held in my Canadian brokerage account count?
They are treated differently from the same shares held in a foreign brokerage, and foreign holdings inside a Canadian registered plan are treated differently again. So the aggregate cannot be built from a list of holdings alone: where each holding sits matters as much as what it is. Build the total account by account, noting the institution and the wrapper, and settle the treatment of each account before adding anything up. That ordering also tells you which documents to request, since the institution's own records are usually the quickest route to a defensible cost figure.
My holding company owns the foreign shares, who files the T1135?
The filer is whoever holds the property. Individuals, corporations, trusts and partnerships are all within the rule, so a corporation over the threshold files in its own name and the shareholder does not report the company's property as their own. Two filings can be due in the same year for one family: one by the individual for property held personally, one by the corporation for property it holds. Where a trust or a partnership is involved, decide the filer before preparing anything, because the aggregate is built per filer and mixing them produces a return that is wrong for both.
I owe no Canadian tax on the property, is a T1135 due?
Yes. Nothing in the test turns on tax payable. A property can produce no income at all, or income already taxed abroad, and the filing requirement is unchanged, because what triggers it is holding specified foreign property over the threshold measured on cost. That is why an empty apartment, a holding that pays no dividend and a quiet foreign business interest are all still in the aggregate. Treating the form as a small tax return is a common reason it goes unfiled for years by people who owe nothing.
I was over the threshold for only one month, does that count?
Yes. The test is whether the cost amount exceeded the reporting threshold at any time in the year, not what the position was on the last day. A single event that sat abroad briefly, such as an inheritance received and then brought to Canada, or a property bought and sold inside the same year, can create a filing year on its own. So the year-end statement is the wrong document to test against. Look at the high point of the aggregate during the year, and keep the working that shows where that point was and when.
Are foreign trusts taxable in Canada?
They can be. Canada's deemed-resident-trust rules can pull a non-resident trust into the Canadian tax system where there is a resident contributor or, in some cases, a resident beneficiary — taxing it as though it were resident here. Separate reporting applies to transfers or loans to a non-resident trust and to distributions and debts from one. The planning point is that contributing to an offshore trust from Canada rarely achieves what the brochure suggests. See non-resident trusts.
Do Canada and the United States share tax information?
Yes, through more than one channel. The treaty has an exchange-of-information article that supports both routine and on-request exchange. Separately, an intergovernmental agreement has Canadian financial institutions identify US-reportable accounts and report them to the CRA, which passes them to the IRS, with the reverse flow for Canadian residents. Most other country pairs use the Common Reporting Standard for the same purpose. See FATCA reporting.
