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Foreign Assets (T1135)

Who must file Form T1135, which foreign property to report, the penalties for not filing and how to catch up through voluntary disclosure.

Under Canadian tax law, any Canadian tax resident who owns specified foreign property (assets located outside of Canada) with a total cost exceeding CAD 100,000 at any time during the tax year must file a foreign asset report. Simply filing the foreign asset report does not incur taxes; however, any income generated from these assets is subject to taxation.

Types of Assets

  1. Overseas bank deposits

  2. Shares of non-resident corporations (other than foreign affiliates)

  3. Debt owed by non-residents

  4. Interests in non-resident trusts

  5. Overseas real estate (excluding personal-use or primary residences)

  6. Other overseas assets (e.g., foreign life insurance, gold, etc.)

  7. Property held in an account with a Canadian registered securities dealer or a Canadian trust company

Why does the CRA require this?

Canada taxes its residents on their worldwide income. Form T1135 shows the CRA where foreign income may arise — interest, dividends, rent or gains on foreign assets — and is part of Canada's wider efforts against tax evasion and money laundering. Filing the form does not create any tax by itself; tax applies only to the income the assets produce.

Keeping your reporting up to date also makes it easier to document the source of funds when you later bring money into Canada.

What if I don't file?

  • Late filing: $25 per day, with a minimum of $100 and a maximum of $2,500 for each year.
  • Knowingly or through gross negligence: $500 per month for up to 24 months ($12,000), or $1,000 per month (up to $24,000) if you ignore a CRA demand to file. After 24 months, an additional penalty of 5% of the cost of the foreign property can apply.
  • Longer audit window: the CRA gets extra time — generally three more years — to reassess income from foreign property that was not properly reported.

Voluntary Disclosures Program (VDP)

If you missed T1135 filings, you can correct them through the CRA's Voluntary Disclosures Program. Under the program in effect since October 1, 2025:

  • If you apply before the CRA contacts you about the issue, penalties are generally waived in full and 75% of the interest is relieved.
  • If you apply after the CRA has contacted you, relief is reduced — 25% of the interest and up to 100% of the penalties.
  • You cannot use the program for an issue that is already under audit.

We are here

Sheng Qian Professional Corp. has prepared many T1135 filings and voluntary disclosures. Contact us and we'll review your situation.