T1134 vs. T1135: Which CRA Foreign Reporting Form Applies to You?

Canadian taxpayers with foreign assets or business interests are often required to file additional information returns with the CRA—but understanding which form applies is critical. 

Two commonly confused filings are Form T1134 and Form T1135. While both relate to foreign reporting, they serve very different purposes and apply to distinct types of ownership and thresholds. Misinterpreting these requirements can lead to significant penalties, even when no tax is owing. Knowing the difference is essential for staying compliant and avoiding unnecessary risk.

Understanding CRA Foreign Reporting Requirements

If you own foreign assets or have interests in foreign entities, you may need to file specific information returns with the Canada Revenue Agency (CRA). The rules depend on the type of property, the cost amount, and your level of ownership or control.

Overview of Foreign Reporting Obligations

Canada requires residents to report certain foreign assets and interests each year. These rules apply even if you earn no income from those assets.

If you hold specified foreign property with a total cost of more than $100,000 at any time in the year, you may need to file Form T1135. The CRA explains these rules under its guidance on foreign reporting requirements.

Specified foreign property can include:

• Funds held in foreign bank accounts
• Shares of non-resident corporations
• Foreign rental properties
• Certain interests in non-resident trusts

Form T1134 is different. You file it if you have an interest in a controlled or not-controlled foreign affiliate. This form reports detailed financial and ownership information about the affiliate.

Foreign reporting forms are information returns. You file them separately from your income tax return.

Who Needs to File With the CRA

You must file these forms if you are a Canadian resident for tax purposes and meet specific ownership thresholds.

Form T1135 applies to individuals, corporations, and certain trusts that own specified foreign property over the $100,000 cost threshold. The CRA provides detailed guidance in its Form T1135 questions and answers.

You may need to file Form T1134 if you own shares in a foreign corporation that qualifies as a foreign affiliate. In general, this happens when:

• You own at least 1% of the shares, and
• You and related persons together own at least 10%

The CRA outlines these rules in its page on information returns relating to foreign affiliates (Form T1134).

You may have to file both forms in the same year if you hold different types of foreign interests.

Penalties for Failing to Report

The CRA takes foreign reporting seriously. Penalties apply even if you owe no additional tax.

If you fail to file Form T1135 or T1134 on time, the CRA can charge a daily penalty. The basic penalty is often calculated per day, up to a set maximum.

More severe penalties may apply if you:

• Knowingly fail to file
• Show gross negligence
• Provide incomplete or false information

Late filing can also extend the reassessment period for your tax return. That means the CRA may have more time to review and reassess your taxes.

Accurate and timely filing reduces your risk of penalties and CRA audits.

What Is Form T1134?

Form T1134 is a detailed CRA information return for Canadians with foreign affiliates. You use it to report ownership, financial data, and income from certain non‑resident corporations.

Purpose of T1134

Form T1134 reports your interest in a controlled or non‑controlled foreign affiliate. The CRA uses it to track foreign corporate structures and confirm that you report foreign income correctly.

The form requires detailed disclosure. You must provide financial statements, ownership percentages, share structure, and transactions between you and the affiliate.

The CRA explains that T1134 applies when a non‑resident corporation qualifies as a foreign affiliate or controlled foreign affiliate at any time in your tax year, as outlined in its guidance on Questions and answers about Form T1134.

This is not a simple asset listing. You must report income such as foreign accrual property income (FAPI), surplus balances, and certain reorganizations. The form gives the CRA a clear picture of your foreign corporate holdings.

Who Should File T1134

You must file T1134 if you are a Canadian resident individual, corporation, trust, or partnership that owns a sufficient interest in a foreign corporation that qualifies as a foreign affiliate.

In most cases, a foreign affiliate exists when you own at least 1% of a class of shares and you, together with related persons, own at least 10%. A controlled foreign affiliate generally means you, alone or with related parties, control the corporation.

The CRA outlines the filing rules and deadlines under Information Returns Relating to Foreign Affiliates (Form T1134).

You must file a separate T1134 for each foreign affiliate. The return is due within the prescribed deadline after your tax year-end. Late filing can lead to penalties.

Types of Foreign Affiliates Covered

T1134 covers two main categories:

• Controlled foreign affiliates (CFAs)
• Non‑controlled foreign affiliates

A controlled foreign affiliate is a non‑resident corporation that you control directly or indirectly, often through share ownership or voting rights. These entities require the most detailed reporting.

A non‑controlled foreign affiliate meets the ownership threshold but is not controlled by you or related persons. You still must report financial and ownership details, though the reporting may differ in scope.

The CRA’s official page for T1134 Information Return Relating to Controlled and Non‑Controlled Foreign Affiliates confirms that both categories fall under the same reporting regime.

If you hold shares in a foreign corporation that meets the foreign affiliate definition at any time in your tax year, T1134 likely applies.

What Is Form T1135?

Form T1135 is a foreign asset reporting form that you file with the Canada Revenue Agency (CRA) when you own certain property outside Canada. It focuses on disclosure, not tax calculation, and applies when your foreign holdings cross a set cost threshold.

Purpose of T1135

Form T1135, also called the Foreign Income Verification Statement, requires you to report specified foreign property you own during the year.

You do not use this form to calculate tax. You use it to disclose details about foreign assets so the CRA can confirm that you report related income, such as interest, dividends, rent, or capital gains, on your tax return.

The CRA increased its focus on offshore compliance in recent years. Under global information‑sharing programs like FATCA and the Common Reporting Standard, foreign financial institutions report accounts held by Canadian residents. The T1135 helps the CRA match that data to your return.

You file the form by the same due date as your income tax return. If you file late or fail to file, penalties can apply even if you owe no additional tax.

Who Should File T1135

You must file Form T1135 if you are a Canadian resident for tax purposes and you own specified foreign property that exceeds the reporting threshold at any time during the year.

This rule applies to:

• Individuals
• Corporations
• Certain trusts
• Partnerships (in some cases)

Most individual investors encounter T1135 when they hold foreign stocks, foreign bank accounts, or foreign rental property outside Canada.

Even if you already report foreign income on your T1 or T2 return, you may still need to file T1135. Filing other forms, such as T106 or T1134, does not automatically remove your T1135 requirement.

Specified Foreign Property Defined

Specified foreign property includes most income‑producing assets you hold outside Canada.

Common examples include:

• Funds in a foreign bank account
• Shares of non‑resident corporations held outside a Canadian brokerage
• Foreign rental real estate
• Interests in non‑resident trusts
• Certain foreign debt or loans

The key factor is where the property is situated and whether it is outside Canada.

Some assets do not count. For example, foreign securities held inside a Canadian mutual fund or ETF are usually not reported by you directly. Property used mainly in an active business may also fall outside the definition.

The CRA provides further detail on what counts as specified foreign property in its Form T1135 questions and answers.

Filing Thresholds for T1135

You must file T1135 if the total cost amount of your specified foreign property exceeds $100,000 CAD at any time during the year.

The cost amount generally means the original purchase price, not the current market value.

There are two reporting methods:

Review CRA guidance on foreign reporting requirements before filing. The rules change, and filing deadlines are strict.

File on time, even if the foreign investment earned no income. Penalties can apply for late or incomplete forms. Double-check names, addresses, and corporation details before you submit.

The Bottom Line

Determining whether T1134, T1135, or both apply depends on the nature of your foreign holdings, ownership structure, and reporting thresholds. Given the complexity and strict penalty regime, accurate classification and timely filing are essential. 

JKC Group helps Canadian taxpayers navigate foreign reporting obligations with precision and confidence. Book a consultation with our team to ensure your filings are complete, compliant, and aligned with your overall tax strategy.