Canadian taxpayers with foreign assets were reminded this week that missing the filing deadline for Form T1135 can get expensive fast. Tax expert Jamie Golombek stressed that penalties accrue every day a return is late, a warning that lands as the spring filing season approaches and many investors tally holdings outside Canada.
The T1135, known as the Foreign Income Verification Statement, is required when a taxpayer owns specified foreign property with a total cost of $100,000 or more at any time in the year. It is due on the same date as the income tax return. Failure to file on time can trigger daily fines and draw extra scrutiny from the Canada Revenue Agency (CRA).
The Warning: Daily Fines Add Up
“Penalties are $25 a day for every day you’re late filing your T1135 for foreign holdings.” — Jamie Golombek
Golombek’s reminder highlights a lesser-known rule that has caught many investors by surprise. The CRA’s standard late-filing penalty is calculated per day, up to a maximum of $2,500 for a typical case. Interest can apply, and repeated or willful non-compliance can lead to higher consequences under gross negligence provisions.
Who Must File, and What Counts as Foreign Property
The T1135 applies to individuals, corporations, and trusts that meet the $100,000 cost threshold in “specified foreign property.” This includes foreign stocks, bonds, funds, rental real estate outside Canada, certain foreign bank accounts, and interests in foreign trusts. Personal-use property like a vacation home used solely by the owner does not generally count.
One frequent surprise is that foreign securities held in a Canadian brokerage account still qualify as foreign property for T1135 purposes. Tax practitioners say that misunderstanding this rule is a common cause of missed filings.
Deadlines and Filing Options
The filing deadline matches the taxpayer’s return due date. For most individuals, that is April 30. Self-employed individuals have until June 15, though any balance owing is still due April 30. Corporations and trusts follow their respective return deadlines.
Taxpayers between $100,000 and $250,000 can often use a simplified reporting method, summarizing by country and asset type. Those at or above $250,000 must provide more detailed disclosures, including securities-by-securities totals.
Penalties, Enforcement, and Relief
In addition to the $25-per-day late fee, the CRA can assess higher penalties where gross negligence is found. Failure to respond to a formal demand to file can also increase costs. The agency may extend the reassessment period for a taxpayer’s return when the T1135 is missing or filed late, keeping the file open longer.
There is a path to relief. Under the taxpayer relief program, the CRA may waive or cancel penalties and interest in cases of extraordinary circumstances, such as serious illness or natural disasters. Voluntary corrections through the Voluntary Disclosures Program may also reduce penalties if made before the CRA contacts the taxpayer.
Common Traps and How to Avoid Them
Tax professionals point to frequent errors that lead to penalties even when taxpayers try to comply. Incomplete reporting, missing T-slips from foreign accounts, and failing to include assets held through Canadian brokerages are recurring issues. Early data gathering and cross-checking statements help reduce mistakes.
- Confirm whether your foreign assets crossed the $100,000 cost threshold at any time in the year.
- Include foreign stocks held in Canadian accounts in your totals.
- Match T1135 deadlines to your tax return due date.
- Use simplified reporting if eligible; keep detailed records regardless.
- Seek relief promptly if exceptional events caused a delay.
Why This Matters for Investors
Global diversification has grown among Canadian households, pushing more filers into T1135 territory. With daily penalties, a short delay can become a multi-hundred-dollar bill. Longer delays, or repeated lapses, can turn costly and may trigger deeper CRA reviews.
Advisers say a practical step is to request year-end foreign holdings summaries early from financial institutions. For investors using multiple platforms, consolidating records before tax season reduces the risk of omissions.
Golombek’s caution lands at a key moment for taxpayers who bought U.S. or overseas assets during market swings. The message is simple: track the $100,000 cost threshold, file on time, and keep records tight. Those who miss the deadline should act quickly. Filing now can stop the daily fines, and, where appropriate, relief programs may soften the impact. With more Canadians owning foreign assets, the T1135 will stay on the CRA’s radar. Expect continued enforcement and more education efforts as filing season approaches.
