2026 T1135 Foreign Income Verification Statement: New Simplified Reporting Thresholds and What Triggers an Audit
If you own property or investments outside of Canada, you need to know about the T1135 Foreign Income Verification Statement. This form tells the Canada Revenue Agency (CRA) about your foreign assets, and getting it wrong can lead to steep penalties or even an audit. With changes to reporting thresholds and increased scrutiny from the CRA, understanding your T1135 obligations has never been more important.
In this guide, we’ll break down what the T1135 is, who needs to file it, the simplified reporting options available, and what might trigger an audit. We’ll also explain why working with a tax professional is your best defence against costly mistakes.
What Is the T1135 Foreign Income Verification Statement?
The T1135 is a form that Canadian residents must file if they own specified foreign property with a total cost of more than $100,000 at any time during the tax year. Think of it as a declaration to the CRA that says, “Yes, I have assets outside Canada, and here’s what they are.”
The purpose of this form is to help the CRA track foreign income and make sure Canadians are paying tax on their worldwide income. It’s not a tax form itself—it doesn’t calculate what you owe. But failing to file it, or filing it incorrectly, can result in serious penalties.
What Counts as Specified Foreign Property?
Specified foreign property includes things like:
- Foreign bank accounts (savings, chequing, or term deposits held outside Canada)
- Shares in foreign corporations (stocks in U.S. or international companies)
- Foreign real estate that generates rental income or is held for investment
- Foreign mutual funds or ETFs
- Interests in foreign trusts
- Cryptocurrency held on foreign exchanges
- Debts owed to you by non-residents
Some things are not included, such as:
- Personal-use property (like a vacation home you only use for yourself and your family)
- Property used exclusively in an active business
- Shares or debts of Canadian corporations
Who Needs to File the T1135?
You must file a T1135 if you’re a Canadian resident (individual, corporation, trust, or partnership) and the total cost of your specified foreign property exceeds $100,000 Canadian at any time during the year.
The $100,000 threshold is based on the cost amount, not the current market value. Cost amount generally means what you originally paid for the property, not what it’s worth today.
For example, if you bought U.S. stocks for $110,000 and they’re now worth $90,000, you still need to file the T1135 because the cost was over $100,000.
When Is the T1135 Due?
The T1135 is due on the same date as your income tax return:
- Individuals: April 30 (or June 15 if you or your spouse are self-employed)
- Corporations: Six months after the end of the tax year
- Trusts: 90 days after the end of the tax year
Simplified Reporting Options for the T1135
The CRA offers two methods for reporting your foreign property on the T1135: simplified reporting and detailed reporting. Which one you use depends on the total cost of your foreign property.
Simplified Reporting (Property Cost Between $100,000 and $250,000)
If the total cost of your specified foreign property is more than $100,000 but less than $250,000, you can use the simplified method. This method is easier because you don’t need to provide detailed information about each individual asset.
With simplified reporting, you:
- Check a box indicating you qualify for simplified reporting
- Report the total cost and income from your foreign property by country
- Don’t need to list each individual investment or account
This saves time and reduces the risk of errors, but you still need to keep detailed records in case the CRA asks for them later.
Detailed Reporting (Property Cost Over $250,000)
If the total cost of your foreign property exceeds $250,000, you must use the detailed method. This means listing each property separately, including:
- The name and country of the foreign institution or entity
- The type of property
- The cost amount
- The income generated (interest, dividends, rent, capital gains)
Detailed reporting is more time-consuming and increases the chance of making a mistake. This is where many taxpayers run into trouble, especially if they have multiple foreign accounts or complex investment portfolios.
What Triggers a T1135 Audit?
The CRA has become increasingly aggressive in auditing foreign property reporting. They use sophisticated data-matching systems to compare your T1135 with information they receive from foreign financial institutions and tax treaties.
Here are some common red flags that can trigger an audit:
1. Failing to File the T1135 at All
If you own foreign property over $100,000 and don’t file a T1135, the CRA will notice—especially if they receive information from foreign banks or governments through automatic exchange programs.
2. Inconsistent Income Reporting
If the foreign income you report on your tax return doesn’t match the income you report on your T1135, the CRA will investigate. For example, if you report $5,000 in U.S. dividends on your return but your T1135 shows $10,000, that’s a mismatch.
3. Large Discrepancies in Cost Amount
If the cost amount you report fluctuates dramatically from year to year without clear explanations (like a sale or purchase), the CRA may question your numbers.
4. Unreported Foreign Accounts
Thanks to the Common Reporting Standard (CRS) and agreements with the U.S. (FATCA), the CRA automatically receives information about Canadian residents’ foreign accounts. If they know you have an account you didn’t report, you’re likely to be audited.
5. Patterns of Non-Compliance
If you’ve had issues with tax compliance in the past—late filings, penalties, or previous audits—the CRA is more likely to scrutinize your T1135.
6. High-Value Foreign Real Estate
Foreign real estate, especially rental properties in popular markets like the U.S., U.K., or Mexico, is a common audit target. The CRA wants to ensure you’re reporting all rental income and properly calculating the cost amount.
7. Cryptocurrency Holdings
Cryptocurrency held on foreign exchanges is considered specified foreign property. Many taxpayers are unaware of this requirement, and the CRA is actively pursuing non-compliance in this area.
Penalties for Getting the T1135 Wrong
The penalties for failing to file a T1135, or filing it incorrectly, are severe:
- Failure to file: $25 per day, up to a maximum of $2,500
- Gross negligence: $500 per month (minimum $2,500, maximum $12,000) if the CRA determines you knowingly or through gross negligence failed to file or made false statements
- Repeat offences: Penalties can be even higher for second or third failures
Beyond financial penalties, an audit can be stressful, time-consuming, and expensive if you need to hire professional help after the fact.
Why Professional Help Matters for the T1135
The T1135 is one of the most complex and error-prone tax forms Canadian residents face. Even small mistakes—like miscalculating the cost amount, forgetting an account, or choosing the wrong reporting method—can lead to penalties or audits.
Here’s why working with a professional tax preparer is the smartest choice:
We Know What to Include (and What to Exclude)
Determining whether a property is “specified foreign property” isn’t always straightforward. A professional can review your assets and make sure you’re only reporting what’s required—and not missing anything critical.
We Calculate the Cost Amount Correctly
The cost amount isn’t always the purchase price. Adjustments for foreign exchange rates, reinvested dividends, and other factors can make this calculation tricky. We ensure your numbers are accurate.
We Match Your T1135 to Your Tax Return
One of the biggest audit triggers is inconsistency between your T1135 and your tax return. We cross-check everything to make sure your foreign income is reported correctly in both places.
We Keep You Compliant Year After Year
Foreign property reporting isn’t a one-time thing. We track your holdings from year to year, making sure you stay compliant as your assets grow or change.
We Represent You If the CRA Comes Calling
If you do face an audit or a CRA review, having a professional who prepared your T1135 means you have an advocate who understands your file and can respond to CRA inquiries on your behalf.
How JHG Corporate and Tax Services Inc. Can Help
At JHG Corporate and Tax Services Inc., we specialize in helping Canadian taxpayers navigate the complexities of foreign property reporting. Whether you’re an individual with a U.S. brokerage account, a business owner with international investments, or someone who recently inherited foreign assets, we’re here to ensure your T1135 is accurate, complete, and filed on time.
We take the stress out of foreign income reporting by:
- Reviewing all your foreign holdings to determine what needs to be reported
- Choosing the right reporting method (simplified or detailed) based on your situation
- Calculating cost amounts and foreign income accurately
- Cross-checking your T1135 with your tax return to prevent audit triggers
- Keeping detailed records in case of a CRA review
Don’t risk costly penalties or a stressful audit by trying to navigate the T1135 on your own. Let our experienced team handle it for you.
Final Thoughts on T1135 Compliance
The T1135 Foreign Income Verification Statement is a critical form for any Canadian resident with foreign property over $100,000. With simplified reporting thresholds, detailed disclosure requirements, and the CRA’s increasing use of data-matching technology, getting your T1135 right is more important than ever.
Whether you’re filing for the first time or have been reporting foreign property for years, working with a professional ensures you stay compliant, avoid penalties, and have peace of mind. Contact JHG Corporate and Tax Services Inc. today to get expert help with your T1135 and all your Canadian tax needs.
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Frequently Asked Questions
Who needs to file T1135 reporting in Canada?
You must file a T1135 if you’re a Canadian resident and the total cost of your specified foreign property exceeds $100,000 at any time during the tax year. This includes foreign bank accounts, stocks, real estate held for investment, and cryptocurrency on foreign exchanges.
What is the simplified T1135 reporting threshold?
The simplified T1135 reporting method is available if your total foreign property cost is between $100,000 and $250,000. With this method, you report totals by country rather than listing each individual asset, making it easier and less time-consuming.
What triggers a CRA audit for T1135 reporting?
Common audit triggers include failing to file the T1135, inconsistent income reporting between your tax return and T1135, unreported foreign accounts detected through international data sharing, and large unexplained changes in your reported cost amounts. The CRA uses sophisticated data-matching technology to identify non-compliance.
What are the penalties for not filing a T1135?
Penalties for failing to file a T1135 start at $25 per day up to $2,500. For gross negligence, penalties range from $2,500 to $12,000. Repeat offences carry even higher penalties, making professional assistance essential for compliance.
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When it comes to taxes, they are always changing, always being updated!
That is why it is always recommended to use a professional like JHG Corporate and Tax Services Inc to get your taxes done to ensure you are getting the most out of your tax return.
Click here to book an appointment with a real tax pro now!
Or Call Our Hotline Today: 778-691-5566
