T1135 Foreign Income Verification Statement: step-by-step filing for Canadian RSU holders

You'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.