A few weeks ago, I mentioned that foreign shares in a non-registered account are considered “specified foreign property” by the Canada Revenue Agency. At tax time, that means you need to file a T1135 Foreign Income Verification Statement form if their cost exceeds $100,000 at any point during the year. Ignore this and you’ll face stiff penalties.
Judging from my inbox, the requirements for filing a T1135 aren’t universally understood. They should be.
As one reader wrote: “This form affects hundreds of thousands of Canadian non-filthy-rich investors who are only following good investment practices by diversifying into non-Canadian vehicles. And who knew? $100,000 seems like a very low threshold in this day and age.”
Even if you didn’t mean to avoid it, the fine is $25 per day for each missed form, with a minimum of $100 and a maximum of $2,500.
If the CRA thinks you’ve knowingly failed to file, or that you’ve been grossly negligent, the penalty is $500 per month, up to a maximum of $12,000. Those fines double if you ignore CRA demands to file. If you know you should file but are more than 24 months late, you can be hit with penalties of 5 per cent of the cost of the property.
But what exactly is “specified foreign property” and how do you know if you need to file a T1135?
To start with, if your property is in the form of shares in a registered account, you don’t have to worry about reporting it: Accounts like TFSAs, RRSPs, RDSPs and RESPs are exempt from the requirement. If you have a foreign vacation home that’s primarily for personal use, it doesn’t count either. There are other exemptions, including foreign cash held in a Canadian account.
Secondly, the $100,000 requirement pertains to the cost amount (which, the CRA clarifies on its website, is generally the adjusted cost base) not the fair market value of all of your specified foreign property.
If you’ve paid a total of $50,000 for foreign assets that subsequently double in value, you may not need to file a T1135. But you do need to file if you pay $100,000 for assets that lose half their value.
If you have investments in an overseas account such as a foreign brokerage, they will count toward your cost amount, as will money in overseas banks. Your gold, silver and $640-million in negotiable bearer bonds stashed in Switzerland? Report them. Easy enough.
But many investors may not realize that foreign shares and instruments like Canadian Depositary Receipts held in a non-registered Canadian brokerage account must also be included in their total. This confusion is understandable given that a Canadian exchange-traded fund of foreign shares does not need to be reported.
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Dalwinder Deol, tax partner at KPMG Private Enterprise in Toronto, said that the question of what constitutes “specified foreign property” can come down to the specifics of an investment’s legal form.
A CDR is legally structured so that investors have a beneficial interest in a foreign corporation, but “Canadian ETFs are a little bit different because you are effectively getting units of a Canadian mutual fund trust,” he said. Your ETF is a Canadian pooled fund product, not a foreign asset.
Then there are U.S.-listed shares of Canadian companies. Foreign property, right? Wrong.
As CIBC Private Wealth put it in an explainer last year, “it is not relevant whether the security is listed on a Canadian or foreign stock exchange, nor if the security is denominated in Canadian or foreign currency.” What matters is the residency of the security’s issuer.
Cryptocurrencies introduce another level of complexity. In the November, 2025, issue of Canadian Tax Focus, lawyers Jeffrey Liu and Jason Rosen wrote that tax professionals frequently advise clients to “err on the side of disclosure” given uncertainty about where these are situated, deposited or held.
If you’re confused, you’re not alone.
“I think you really have to lean on the financial institution to understand what you’re investing in to see if it’s specified foreign property,” Mr. Deol said. Foreign holdings reports issued by banks as part of their investment packages are a good starting point, he said, though self-directed investors may not enjoy the same level of reporting.
If in doubt, it doesn’t hurt to ask a tax professional – ideally before you hit “buy.”
“It’s important to really understand the instrument you’re investing in, and its legal form, and get the right advice around filing requirements,” Mr. Deol said.
E-mail your questions to agalbraith@globeandmail.com. I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.