T1135 Foreign Income Verification Statement: step-by-step filing for Canadian RSU holders
Complete T1135 filing guide for Canadian residents holding US RSUs and stocks. CAD 100K threshold, simplified vs detailed method, penalties of CAD 2,500+, US broker account reporting, real-world worked example.
Shivang BadayaCo-Founder & Chief Executive Officer, RoviaYou're a Canadian tax resident with US RSUs. You moved to Vancouver, Toronto, or Montreal for a US tech company's office or you're working remotely for a US employer. Either way, your vested shares are with Schwab or E*TRADE in the US. Your cost basis is creeping past CAD 100,000. T1135 is now mandatory — and the penalties for getting it wrong are the harshest in Canadian individual taxation.
The 30-second answer: T1135 Foreign Income Verification Statement is mandatory for Canadian residents who held specified foreign property (US RSU shares, US bank, foreign mutual funds, etc.) with total COST > CAD 100,000 at any point during the year. Filed alongside T1 return by 30 April. Simplified method for CAD 100K-250K aggregate cost; detailed method (per-property listing) for >CAD 250K. Penalties: CAD 25/day up to CAD 2,500/year for late filing, plus 5% of unreported value for negligent omission, plus unlimited reassessment window for unfiled years. RRSP/TFSA-held US stocks are EXEMPT from T1135 reporting (one of many reasons to wrap).
Reading this in the run-up to 30 April 2026? Your 2025 calendar year T1135 (if applicable) is due alongside your T1. This piece is part of our Canada residents with US RSUs hub.
What is specified foreign property?
T1135 doesn't apply to all foreign-touching items. The CRA's definition of specified foreign property (SFP) includes:
| Included | Not included |
|---|---|
| Foreign bank accounts | Personal-use foreign real estate |
| Shares of non-resident corporations | Inventory used in active business |
| Indebtedness owed by non-residents | Pension plan held by spouse |
| Foreign-trust interest | RRSP / TFSA / RESP / RRIF / DPSP holdings |
| Foreign real estate (investment) | Foreign property used in active business |
| Foreign-currency cash | Personal-use property under CAD 10,000 |
For RSU holders, the key categories:
- Shares of non-resident corporations — all your US RSU shares at US brokers
- Foreign bank accounts — any USD account you maintain (Schwab Bank, Wise, etc.)
- Foreign-currency cash — USD held outside Canadian banks
If aggregate cost across these exceeds CAD 100,000 at any time during the year, T1135 is mandatory.
The CAD 100,000 threshold mechanic
The trigger is cost basis, not market value. For each SFP, "cost" means:
- US RSU shares: FMV at vest × number of shares × CAD/USD rate at vest date
- US bank account: balance during year × CAD/USD rate when funded
- Foreign mutual fund: original investment in CAD
This is the BOOK VALUE measurement, not the market value. So if you have RSU shares with vest-time cost of CAD 95K that have appreciated to CAD 250K, you're still below threshold IF the cost basis is the only measure. But add another USD bank account with CAD 10K balance and you're over.
Practical tip: track cost basis in CAD per lot as RSUs vest. Don't wait until April to compute — you need to know whether you crossed the threshold during the year, not at year-end alone.
Simplified vs detailed reporting
T1135 has two reporting tiers:
Simplified Method (Part A)
- Eligible when total cost ≤ CAD 250,000
- Report TOTAL COST by category, not by individual property
- Three columns per category: maximum cost during year, cost at year-end, gross income, gain/loss
- 7 categories: cash, shares of non-resident corporations, indebtedness, indirect interests in trusts, real property, other foreign property, prop held in account at foreign brokerage
Detailed Method (Part B)
- REQUIRED when total cost > CAD 250,000
- Per-property listing
- Each property: name, country, max cost, year-end cost, income, gain/loss
- For shares: company name + country
- For accounts: financial institution + country
For most early-career RSU holders, simplified method works for years 1-2. By year 3, FAANG-type vest cohorts push past CAD 250K and detailed method becomes mandatory.
Strategic recommendation: start with detailed method from day one. The detailed records you maintain (lot-by-lot cost basis, vest-date FX rates, share counts) are necessary anyway for Canadian capital gains computation. Building the spreadsheet once and reporting in detailed format avoids the transition pain.
Worked example: Toronto engineer with NVIDIA RSUs
A Toronto-based engineer at NVIDIA, 2025 calendar year:
- Q1 2025 vest: 50 shares at USD 140 = USD 7,000 = CAD 9,800 (rate 1.40)
- Q2 2025 vest: 50 shares at USD 165 = USD 8,250 = CAD 11,550 (rate 1.40)
- Q3 2025 vest: 50 shares at USD 180 = USD 9,000 = CAD 12,600 (rate 1.40)
- Q4 2025 vest: 50 shares at USD 175 = USD 8,750 = CAD 12,250 (rate 1.40)
- Prior years vests still held: cost basis CAD 105,000 (200 shares total)
- Schwab USD cash balance at year-end: USD 5,000 = CAD 7,000
Total cost basis foreign property:
- Shares: CAD 105,000 + 9,800 + 11,550 + 12,600 + 12,250 = CAD 151,200
- USD cash: CAD 7,000
- Total: CAD 158,200
T1135 status: REQUIRED. Above CAD 100K threshold. Below CAD 250K, so simplified method allowed.
Simplified method completion:
| Category | Max cost during year (CAD) | Cost at year-end (CAD) | Income (CAD) | Gain/loss (CAD) |
|---|---|---|---|---|
| Shares of non-resident corporations | 151,200 | 151,200 | Dividend received: 480 | Realised gain: 0 |
| Foreign bank/brokerage account cash | 7,000 | 7,000 | 0 | 0 |
Country: United States. Type: USA.
Filing deadline: 30 April 2026, alongside T1 individual return.
The penalty regime (and why it's harsh)
T1135 penalties are tiered:
| Violation | Penalty |
|---|---|
| Failure to file by due date | CAD 25/day, max CAD 2,500 |
| Knowing or gross negligence | Greater of CAD 500 (×months) or 5% of unreported cost |
| Continued failure after notice | CAD 24,000 |
| False statement / omission | Greater of CAD 24,000 or 5% of unreported cost/income |
But the most punitive feature isn't the per-form penalty — it's the unlimited reassessment window. Normal 3-year limit doesn't apply to T1135-unfiled years. CRA can go back 10, 15, 20 years and reassess the underlying T1 returns indefinitely if T1135 wasn't filed.
This is why Voluntary Disclosures Program (VDP) for missed T1135 years is the standard remedy. VDP typically waives the per-form penalty if eligibility criteria met (voluntary, before CRA contact, completion of submission, 1 year+ overdue or with penalty exposure).
Common T1135 mistakes for RSU holders
Mistake 1: Forgetting the threshold is COST not market value. Many RSU holders look at their Schwab account showing CAD 350K market value and assume they're definitely above threshold. Cost might be CAD 200K. Both numbers matter, but the threshold test is on cost.
Mistake 2: Forgetting USD cash positions. Your Schwab settlement account holds cash from RSU sales pending re-investment. That USD cash counts toward T1135. So does the Wise/Revolut USD account you keep for transfers.
Mistake 3: Not tracking lot-by-lot cost basis in CAD. Years from now, when you sell, your cost basis is computed in CAD at the vest-day exchange rate per lot. If you only have USD totals, you can't compute the actual CAD-denominated gain. Track per-lot CAD cost from day one.
Mistake 4: Filing T1135 in the wrong currency. All values on T1135 must be reported in CAD using the Bank of Canada noon rate (or alternative published rate) on the relevant transaction date.
Mistake 5: Assuming RRSP-held US stocks need reporting. They don't. RRSP, TFSA, RESP, RRIF, DPSP holdings are EXEMPT from T1135. Only taxable account foreign property counts. This is a strong argument for RRSP wrapping of US dividend stocks.
Mistake 6: Filing T1135 late but T1 on time. T1135 is a separate filing obligation. Even if T1 is filed and accepted by 30 April, T1135 must be filed independently. Missing T1135 even by one day triggers the CAD 25/day penalty.
Strategic interaction with RRSP and TFSA
For Canadian RSU holders, the T1135 threshold creates a natural incentive to wrap US stock exposure:
- RRSP: Holdings are exempt from T1135. Plus US-Canada Treaty Article XXI exempts US dividends paid into RRSP from US WHT — making RRSP optimal for US dividend stocks.
- TFSA: Holdings exempt from T1135. Note: TFSA does NOT get Treaty WHT exemption (15% US WHT still applies, non-recoverable). Still tax-free in Canada once inside.
Strategy: sweep US stock proceeds into RRSP (preferred for dividend-yielders) and TFSA (preferred for growth-oriented holdings) up to annual contribution limits. This keeps your TAXABLE-account foreign property below the CAD 100K threshold and eliminates T1135 filing burden.
For a Canadian RSU holder with the strategic discipline to wrap aggressively, T1135 can be a temporary annual obligation that fades once wrapped holdings dominate.
Cross-references
- Canada residents with US RSUs: complete tax + filing guide — the parent guide covering Section 7, 50% inclusion, RRSP/TFSA
- Canada markets and RSU tax hub — quick reference + related deep dives
Bottom line
T1135 is one of the highest-friction obligations Canadian RSU holders face. The threshold is CAD 100K of total cost in specified foreign property, computed in CAD at the vest-date exchange rate, summed across all US stock + USD bank/brokerage. Late or missing T1135 triggers CAD 2,500 penalty per year, plus 5% of unreported value, plus unlimited CRA reassessment window. Start tracking lot-by-lot cost basis in CAD from day one. Use detailed method from year one. Wrap US dividend stocks into RRSP aggressively to keep taxable-account foreign property below threshold. If you've missed T1135 for prior years, the Voluntary Disclosures Program is the right remedy — work with a Canadian cross-border tax accountant. Don't ignore T1135. The penalties compound.
Frequently asked questions
- When is T1135 required to be filed? ▾
- T1135 Foreign Income Verification Statement must be filed if a Canadian tax resident held specified foreign property (SFP) with total cost > CAD 100,000 at ANY POINT during the calendar year. The threshold is based on COST (book value), not market value. For RSU holders: each lot's cost = FMV at vest in CAD. Sum across ALL specified foreign property: US stocks, US bank accounts, foreign real estate (excluding personal-use), shares in foreign corporations, foreign mutual fund holdings. The form is due 30 April following year-end (same as T1 individual return).
- What is the penalty for not filing T1135? ▾
- Penalties for non-filing or late filing: CAD 25 per day for up to 100 days = max CAD 2,500 minimum penalty per year, plus separate penalty of 5% of unreported cost or income (whichever is higher) for grossly negligent failure. For continued non-compliance: CAD 12,000-24,000 escalating penalties. The CRA also has unrestricted reassessment authority for unfiled T1135 years — meaning normal 3-year reassessment limit doesn't apply. Voluntary Disclosure Program (VDP) is the standard remedy for missed prior years — typically waives the penalty if you come forward before CRA contact.
- What's the difference between simplified and detailed reporting method? ▾
- Simplified method: total cost of all specified foreign property between CAD 100,000 and CAD 250,000 at any time during year. Report aggregate values by category (e.g., 'shares of non-resident corporations' = total). Detailed method: required when total cost > CAD 250,000. List each property individually with name, country, cost, income, gain/loss. For US RSU holders accumulating shares over a few years, you typically hit the CAD 250K detailed threshold within 1-2 years — start with detailed habits from day one to avoid the transition complexity.
- Do US RSUs held at my employer's broker count toward the T1135 threshold? ▾
- Yes. Specified foreign property includes shares of non-resident corporations regardless of how held — at Schwab, E*TRADE, Fidelity, Morgan Stanley, or any US broker. The custodian doesn't matter; what matters is the residence of the corporation that issued the shares (US corporation = foreign property for Canadian tax purposes). Each lot's cost = FMV at vest in CAD using Bank of Canada exchange rate. RSU holders at FAANG-type companies typically exceed CAD 100K within first year of vesting.
- What about US RSUs held inside RRSP or TFSA? ▾
- RRSP-held foreign property is EXEMPT from T1135 reporting. TFSA-held foreign property is also EXEMPT. RESP-held foreign property is EXEMPT. The T1135 rules cover taxable accounts only. So if you sweep US stock exposure into RRSP/TFSA wrappers, those holdings don't add to your CAD 100K threshold calculation. For RSU holders who can transfer cash equivalents into RRSP after vest, this is one of several reasons RRSP wrapping is tax-efficient.
- Has the CRA increased T1135 enforcement? ▾
- Yes. The CRA has materially increased T1135 enforcement since the 2014 form overhaul. Specific changes: (a) automatic data exchanges with the US IRS under FATCA mean CRA receives reporting on Canadian-resident US accounts, (b) audit triggers when T1 declares no foreign income but data exchange shows US accounts, (c) bonus penalty regime for repeat non-filers. For RSU holders with material US exposure, treat T1135 as a non-optional annual chore. The Voluntary Disclosures Program is the right answer for missed years — typically waives penalty plus interest if eligibility criteria met.
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About the author
Co-Founder & Chief Executive Officer, Rovia
CFA charterholder with 10+ years across hedge funds and NRI fintech. Covers RSU taxation, equity comp, and cross-border investing for Indian residents. Ex-JP Morgan, Makrana Capital, Zolve.
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