Do I file Form T1135 even if no tax is owed?
Information return obligations of this kind are generally required on the facts rather than on the tax result, so a nil position does not remove one. Canadian residents — individuals, corporations, trusts and partnerships — whose specified foreign property exceeds the reporting threshold at any time in the year, measured on cost, not market value.
What happens if I have missed Form T1135 for several years?
Missed years are dealt with as a package rather than one at a time, because the route chosen for the first year affects the relief available for the rest. We map the years and the obligations before anything is filed.
Is Form T1135 the same as the other reports I already file?
No. The foreign income verification statement, reporting specified foreign property held by a Canadian resident. Satisfying a different obligation, even one covering the same accounts or entity, does nothing for this one.
Do I have to report my flat abroad on T1135?
It depends on what the property is used for and on what it cost you. Personal-use property abroad is treated differently from property held to earn income, so a flat you stay in when you visit is not in the same position as one you let out. If it is rented, it is specified foreign property and goes into the total. The measure is the cost amount, what you paid expressed in Canadian dollars, not what the flat is worth now, which surprises owners whose property has risen sharply. Inherited property has a cost too, set when you acquired it. Work out the cost first; the reporting answer follows from it.
Is the T1135 threshold based on cost or market value?
Cost, and this is the most common misunderstanding about the form. The test looks at the cost amount of your specified foreign property in aggregate, at any time in the year, rather than at current market value. Two things follow. A long-held property that has multiplied in value may still sit below the line, because its cost has not changed. And somebody who has just bought abroad can be over it immediately. Cost also has to be expressed in Canadian dollars, which for an asset bought years ago means going back to the rate at the time of acquisition, so keep the purchase documents rather than only the current statements.
Do foreign shares in my Canadian brokerage account count?
Shares of a foreign company held in an account with a Canadian registered securities dealer are treated differently from the same shares held through a foreign brokerage, and property inside a Canadian registered plan is treated differently again. So the question is not only what you own but where it is held and through whom. This is why two people with identical holdings can have different reporting positions. Bring us the statements with the institution named on them rather than a list of securities: the identity of the dealer and the type of account decide the treatment as much as the holdings do.
Does T1135 apply if I was only over the threshold mid-year?
The test looks at any time in the year, not only at the year end. If your specified foreign property exceeded the threshold at any point, because you held an overseas account for a few months before closing it, or bought and sold a foreign property inside the same year, you are within the reporting requirement for that year even though a year-end snapshot shows nothing. This catches people who inherit property abroad and sell it in the same year, and people who moved funds offshore temporarily. Keep the statements covering the months the asset existed, because a closed account is far harder to document afterwards.
Does property I use personally abroad have to be reported?
Property held for your own personal use is treated differently from property held to earn income, so a holiday flat that is never let and a vehicle kept abroad are not in the same position as a rented apartment or a foreign brokerage account. The difficulty is mixed use. A property you occupy for part of the year and let for the rest does not stay outside reporting simply because you stay in it, and the year the use changes is the year to look at closely. Tell us how the property was actually used, month by month, rather than what it was bought for.
I have never filed T1135, what should I do now?
Do not simply start filing this year and leave the earlier ones behind. We establish the years you were resident in Canada, then rebuild the cost amount of each foreign asset for each of those years, which usually means purchase deeds, the bank records for the transfers that funded them, and historic exchange rates. Only then is it clear which years were genuinely over the threshold, and often it is fewer than the client feared. From there we choose the route for correcting the back years and set out the likely exposure before anything goes to the CRA. That work is priced in writing before it starts.
How do I report foreign income on a Canadian return?
You report foreign income in Canada by type and in Canadian dollars. Foreign employment income, interest, dividends, rent, pension and capital gains each go on the line for that kind of income, converted at the rate for the day of the transaction or an acceptable average, with the gross amount reported and the foreign tax withheld claimed as a credit rather than netted off. Holding foreign property above the cost threshold adds the foreign income verification statement, which is a separate filing. See the T1135.
Is an inheritance from overseas taxable in Canada?
Canada has no inheritance or estate tax, so receiving a bequest is not income to you. Tax happens on the other side of the transaction — the deceased's final return, where a deemed disposition of their property can arise, and any tax the foreign country levies on the estate. What changes for you is what comes next: the asset you now hold may be reportable foreign property, and its value at the date of death becomes your cost base for future gains. See a foreign inheritance.
