Never filed T1135 for your US account: penalties and catch-up

Did my US brokerage account require a T1135?

A Canadian-resident individual generally must file Form T1135, the Foreign Income Verification Statement, when the combined cost of specified foreign property exceeds C$100,000 at any time in the year. Citizenship does not control this Canadian filing duty (Income Tax Act, section 233.3).

US shares count even when a Canadian broker holds them: shares of a non-resident corporation are specified foreign property. Cash deposited or held outside Canada can also count; currency alone does not decide. Add all reportable foreign property rather than testing each account separately (section 233.3).

Use Canadian dollars, generally converting each purchase at the rate in effect when you bought it. Cost generally means adjusted cost base (roughly what you paid), not today's market value or just the December statement balance. The highest month-end cost can stand in for the highest cost during the year, and property received as a gift or inheritance costs its fair market value on that date (CRA: Form T1135 instructions; CRA: T1135 questions).

Check exclusions before treating every missed year as a filing failure:

• Foreign property held in an RRSP, RRIF, PRPP, RPP or TFSA is excluded (CRA: Federal income tax information).
• An investment in a Canadian mutual fund trust is not specified foreign property; one in a non-resident mutual fund is reported as that investment, not its underlying holdings (CRA: T1135 questions).
• An individual is exempt for the year they first became resident in Canada (section 233.7). For investments held on arrival, the starting cost for later years is their fair market value on that date (CRA: T1135 questions).
• Time as a non-resident does not count: if you moved to or from Canada during the year, CRA asks for property information only for the period you were resident (CRA: T1135 questions). A person the Canada–US treaty treats as resident only in the US is deemed non-resident in Canada (section 250(5)).

Quebec residents also file a separate foreign-property return (TP-1079.8.BE-V), but only for tax years ending after December 30, 2025. T1135 does not replace it. A missed year ending after that date needs both; earlier years carry no Quebec return (Revenu Québec: Foreign property reporting).

The complete property test and penalty grid belong in Foreign property and affiliate reporting.

I reported every US dividend and interest payment. How serious is the missed form?

Reporting all the income does not remove the T1135 duty. The late-filing penalty is charged for the missing form, not for unpaid tax, at up to C$2,500 for each missed year (section 162(7)). Larger penalties need knowing failure or gross negligence.

Check the filed T1 against the brokerage records before concluding that only the form is missing. Report foreign interest and dividends in Canadian dollars at the gross amount; do not subtract the foreign tax withheld, which may qualify for a foreign tax credit instead (CRA: Line 12100; Foreign income on a Canadian return). Reinvested income and sales also deserve a check.

When does the penalty clock stop, and when do larger penalties apply?

The ordinary T1135 late-filing penalty is C$25 per day, with a minimum of C$100 and a maximum of C$2,500 for each annual return. The daily count stops when the form is filed or after 100 days, whichever comes first, so a form more than 100 days late is already at the maximum. The form is still required, and interest runs on the penalty from the form's due date, not its assessment date (section 161(11); CRA: Table of penalties).

T1135 is due on your income tax return's due date, even if no return is required: generally April 30, or June 15 if you or your spouse or common-law partner is self-employed. Establish each year's due date before counting late days (CRA: Filing deadline; T1135 instructions).

Larger penalties need more than lateness. Knowing failure or gross negligence sets the penalty at C$500 for each month or part of a month the form is missing, up to C$12,000 over 24 months, less the late-filing penalty. Knowingly or grossly negligently ignoring a formal CRA demand to file doubles that (C$1,000 a month, up to C$24,000). Where a monthly penalty applies, a form still missing after 24 months can bring the combined amount to 5% of the year's highest total cost of specified foreign property, after crediting earlier penalties. A knowing or grossly negligent false statement or omission has its own penalty: the greater of C$24,000 and 5% of the highest cost of the property it concerns. Being more than 24 months late does not, by itself, establish gross negligence. The penalty table is in Foreign property and affiliate reporting (section 162(10) and (10.1); section 163(2.4)).

Separately, the CRA can reassess a year three years later than usual when both hold: foreign property income (dividends, interest or a taxable gain on a sale) was left off the income tax return, and the T1135 was late, missing or contained a false statement or omission. Lateness alone does not trigger this extension (CRA: Foreign Income Verification Statement; section 152(4)(b.2)). With no time limit, the CRA can reassess where a return or other information contains a misrepresentation attributable to neglect, carelessness or wilful default, or fraud (section 152(4)(a)(i)).

In what order should I catch up?

Choose the correction route before submitting missing forms or income adjustments. A Voluntary Disclosures Program (VDP) application is a coordinated disclosure; an ordinary late filing followed by a relief request is a separate route.

For an ordinary correction outside VDP:

1. Review each year's residence, exclusions and combined foreign-property cost.
2. Prepare the required T1135s, working from the oldest missing year forward so the records reconcile. This is a practical preparation order, not a CRA filing rule.
3. File the missing forms and, at the same time, ask to change any T1 that left out income. A T1 whose income was complete does not need to change only because T1135 was missing.
4. Submit the T1135 penalty-relief request with the chronology, supporting evidence and filing confirmations.
5. File each new year's T1135 on time while you catch up.

An assessed T1 can be changed through the available online service or a paper Form T1-ADJ request; wait for the original notice of assessment first (CRA: Changing a tax return). Filing T1135 does not itself change the income on a T1.

How do I file T1135 for a past year?

File a separate T1135 for each year that required one. The current form says it is for 2015 and later taxation years; earlier years need that period's edition on CRA's T1135 forms page.

Individuals can file T1135 electronically for the 2017 and later tax years; earlier years must be paper-filed. Keep the electronic confirmation number or proof of mailing (CRA: T1135 questions). A paper T1135 can be attached to a paper return or sent separately to the Winnipeg Tax Centre; use the current form instructions for the address (CRA: Foreign Income Verification Statement).

For a past year you may use the simplified Part A if your total cost went over C$100,000 but stayed under C$250,000 all year. If it reached C$250,000 at any time in the year, that year needs the detailed Part B (CRA: T1135 instructions; CRA: T1135 questions). Both parts ask for the property's gross income and its gain or loss on disposition, so reconcile them to the T1 before filing. Foreign property and affiliate reporting explains both.

Reconstruct each year's figures from statements and transaction records; today's balance does not stand in for them. The Act's exception for unavailable information does not cover T1135 (section 233.5; CRA: Table of penalties).

Can CRA cancel the penalty, and what should my request say?

CRA may grant T1135 penalty relief on a written request, considered on its own circumstances. Relief is discretionary (CRA: T1135 questions). It can be granted before a penalty is assessed (a waiver) or after (a cancellation) (IC07-1R1, paragraph 22).

A useful T1135 request connects the explanation to each missed deadline. Include:

• The affected years, account details and penalties you want waived or cancelled.
• When the filing obligation arose, when you discovered the omission and when you corrected it.
• Whether all foreign investment income was reported, with the relevant T1 information and brokerage summaries.
• What prevented timely filing, how long it affected you and documents supporting that explanation.
• Copies of the corrected forms, filing confirmations and relevant CRA correspondence.

CRA asks for a complete description and evidence showing how the circumstances prevented compliance (CRA: How to apply for relief).

Serious illness or CRA errors may support relief, and CRA weighs care taken, compliance history and how promptly the omission was fixed (IC07-1R1, paragraphs 25, 26 and 33). Taxpayers are generally responsible for a preparer's errors or delays, though relief can be considered where an extraordinary circumstance beyond the preparer's control prevented compliance. Not knowing a filing rule is not among the situations listed for relief, but the guidelines are not binding, so explain honestly how the rule was missed and what you did once you found out (IC07-1R1, paragraphs 23–24 and 35–36).

Ask within 10 years after the end of the calendar year in which the tax year at issue ended (IC07-1R1, paragraphs 12 and 13). For sending the request (Form RC4288) and review of a refusal, see Penalties, interest and relief.

Should I use the Voluntary Disclosures Program instead?

VDP can cover a missed T1135 even where the omission concerns an information return rather than unreported income. It generally requires information at least one year past its filing due date, penalties or interest that could apply, complete disclosure and the other program conditions (CRA: VDP eligibility).

VDP generally does not cover penalties or interest already assessed, so the order of steps can matter. An audit or investigation initiated against you or a related taxpayer concerning the disclosed information prevents the application from being voluntary (IC00-1R7, paragraphs 10, 11 and 17).

For qualification, current relief levels and the application process, see Unreported income and voluntary disclosure.

What changes if CRA already charged a penalty or wrote to me?

An assessed T1135 penalty calls for checking the assessment and considering taxpayer relief. A CRA letter calls for identifying what CRA has started; not every letter has the same effect. An automatic T1135 reminder on a T1 notice of assessment does not prove that CRA failed to receive the form, so check your filing confirmation (CRA: T1135 questions).

An education letter can leave a VDP application unprompted (no contact about an identified issue); a letter identifying a specific omission can make it prompted. An audit or investigation about the disclosed information is a different barrier (IC00-1R7, paragraphs 17–20). Preserve the letter and its response deadline; a formal demand to file matters most, since knowingly ignoring it brings the larger penalty above. For the response process, see CRA reviews and audits.

If you dispute the legal basis or calculation, do not rely only on a discretionary relief request. A notice of objection is generally due within 90 days of the day the notice was sent; for an individual's assessment for a year, the later of that day and one year after the filing-due date (Income Tax Act, section 165). Interest can continue while relief is considered (IC07-1R1, paragraph 22.1).

Does the same US account create an IRS or FBAR catch-up duty?

A missed Canadian T1135 is not a missed US form. FBAR applies to US persons with qualifying accounts outside the United States; a person who is not a US person has no FBAR duty under that rule (FinCEN), and an account located in the United States is not in a foreign country for FBAR purposes (31 CFR 1010.350).

US tax on investment income is a separate question. US-source payments to a non-resident can involve withholding, and Form W-8BEN documents foreign status and, where applicable, treaty benefits (IRS: W-8BEN instructions). A nonresident not engaged in a US trade or business generally must file a US return on that income only if not all the US tax owed was withheld (IRS: Form 1040-NR instructions, Table A); see Keeping a US brokerage account after moving to Canada for the detail. Correcting T1135 resolves neither.

US citizens, green card holders and other US tax residents should review missed Canadian-account reporting in Missed FBAR or TFSA forms after filing US returns.

When should I get help, and what should I gather?

Get professional judgment before submitting when income was omitted, CRA has contacted you, residence is uncertain or knowing failure or gross negligence may be alleged. Those facts change the correction route or potential penalty.

Prepare brokerage statements for every affected year, purchase and sale records, Canadian-dollar cost calculations, filed T1s, notices of assessment, T1135 confirmations and all CRA letters. Include the date you first became Canadian resident and a short chronology of discovering and fixing the omission.

Example

Illustrative only; all amounts are Canadian dollars.

A Canadian resident held US shares costing C$150,000 in a non-registered brokerage account for three consecutive years. No first-year residence exemption applies. The resident reported all C$5,000 of annual dividends and interest, but filed no T1135. Each form is more than 100 days late.

Under the ordinary late-filing rule, the potential penalty is C$2,500 per year, or C$7,500 for three years, before interest and any relief. This assumes no knowing failure, gross negligence or demand-related escalation.

The resident checks VDP eligibility before submitting corrections. If using ordinary filing, the resident completes each missing T1135, using Part A because the cost stayed under the simplified-method limit, and requests relief with a chronology and evidence. Reporting all the dividends does not erase the penalties, but the three-year reassessment extension above does not apply: it needs omitted foreign income as well as a late form. If dividends were omitted instead, the T1s and disclosure route also need review.

Different for you?

• Several missing years, omitted income or a possible larger penalty: bring the records and CRA letters for cross-border tax help before submitting corrections.
• A corporation, not you, holds the account: a corporation has its own T1135 duty; see Foreign property and affiliate reporting.
• You are considering VDP, including corrections to a Quebec return: see Unreported income and voluntary disclosure.
• CRA has started a review or audit, or the charge is already assessed or relief was refused: see Responding to CRA reviews and audits and Penalties, interest and relief.
• Your US company or LLC may be a foreign affiliate: see Missed foreign affiliate reporting for a US company.
• You are a US person with missed US foreign-account forms: see Missed FBAR or TFSA forms.
• Your move to Canada changed the account or investment records: see Keeping a US brokerage account after moving to Canada.