Why T1135 catches people off guard
T1135 non-compliance is one of the most common — and most expensive — issues for newcomers to Canada. Most cases are not intentional. They result from not knowing the rules. CRA does not grant exemptions for either.
The threshold is based on cost, not market value
The CAD $100,000 threshold applies to the adjusted cost base (ACB) of specified foreign property — not its current market value. Many newcomers cross the threshold in their first year without realizing it. Assets include foreign bank deposits, stocks and funds held at foreign brokerages, foreign rental property, and interests in foreign corporations. Your principal residence abroad is exempt — but investment properties are not.
Year-one cost basis errors are hard to fix
The cost bases you establish for foreign assets on your date of entry directly affect every future capital gains calculation and T1135 reporting amount. CRA does not accept retroactive adjustments without documentation established at the time of entry. Errors in year one compound into larger problems over time.
CRA is getting better at finding unreported assets
Through the Common Reporting Standard (CRS) and other international information-sharing agreements, CRA now receives financial data from over 100 countries. The probability of detection for unreported foreign assets rises every year. Voluntary disclosure before CRA makes contact is the only path to meaningful penalty reduction.
What non-compliance actually costs
Penalty exposure
- $25/day late penalty, up to $2,500 per year per missed filing
- Gross negligence: up to 5% of the cost of unreported assets
- Three missed years means $7,500 minimum — before interest
Your options before CRA acts
- Voluntary Disclosures Program (VDP) for late or missing filings
- VDP can reduce or eliminate penalties and interest
- Once CRA initiates contact, VDP is no longer available
Frequently asked questions
Which foreign assets count toward the CAD $100,000 T1135 threshold?
The threshold applies to the adjusted cost base (ACB) of specified foreign property — not market value. This includes foreign bank deposits, stocks and funds held at foreign brokerages, foreign rental property, and interests in foreign corporations. Your principal residence abroad is exempt, but investment properties are not. If you hold multiple foreign assets, their ACBs are aggregated. If you are uncertain whether your holdings require T1135 reporting, early advice is the safest course.
I missed filing T1135 for prior years — what penalties am I facing?
The standard penalty for late or missing T1135 filings is $25 per day, up to a maximum of $2,500 per year per missed filing. For knowing or gross negligence failures, penalties can reach 5% of the cost of unreported foreign property. If you have not yet been contacted by CRA, the Voluntary Disclosures Program (VDP) may allow you to come forward, file late returns, and reduce or eliminate penalties. Acting before CRA initiates contact is critical — once an audit or review begins, VDP is no longer available. We can help you assess your exposure and structure a disclosure plan.
I recently became a Canadian resident and have foreign investments — do I need professional help with T1135?
Your first year of Canadian residency is the most consequential for T1135 purposes. The cost bases you establish for foreign assets on arrival will determine your future capital gains calculations and reporting obligations. Errors made in year one are difficult and costly to correct later. If you hold Hong Kong or Taiwan-based investments, property, or business interests, we strongly recommend a structured review before filing your first Canadian return.
The first year of Canadian residency is the most consequential for T1135. Initial conversations are confidential and do not require any sensitive documents.
Start a confidential conversation