T1135 & the $100,000 Cost Test: Do You Need to File?

Quick Answer: Who Has to File T1135?

Why Your US Stocks Might Already Trigger a CRA Filing

If you have been dollar-cost averaging into US stocks through Questrade, Wealthsimple or TD Direct over the past few years, your non-registered account may have quietly crossed a threshold that CRA cares about. Form T1135, the Foreign Income Verification Statement, is the filing that catches most Ontario investors by surprise — and the usual reason is that they look at market value instead of cost.

A pre-year-end review of your investment records is the easiest way to spot this before filing season. The rules are not as scary as they sound, but the penalties for missing them are real.

Quick Start: Pick Your Path

Different filers run into T1135 for different reasons. Find your situation below, then skip to the section that matters most for you. Our tax filing and advisory services cover each of these scenarios in depth.

What CRA Considers Specified Foreign Property

The distinction that trips up most readers is the Canadian-brokerage question. If you hold Apple or Microsoft shares in a non-registered account at Questrade, those shares are foreign property for T1135 purposes even though your brokerage statement is in Canadian dollars and the account is domiciled in Canada. What matters is the issuer of the security, not the location of the account.

T1135 is a federal filing under the Income Tax Act, so your province of residence — Ontario, Quebec, Alberta — does not change the obligation.

Cost Amount vs. Fair Market Value: The Test That Catches People Out

This matters enormously for growth investors. A portfolio that has doubled in value can still sit below the filing threshold if the original purchase cost was modest. A portfolio that is barely breaking even can sit above the threshold if the dollars invested added up to more than $100,000.

Each tranche of a US stock purchase has to be converted into Canadian dollars at the exchange rate in effect on the day you bought it, not at a single blended year-end rate. The Bank of Canada publishes daily rates that CRA generally accepts for this purpose.

The "at any time during the year" wording is the other quiet trap. If your aggregate cost crossed $100,000 in July and you sold down to $60,000 by December, you are typically still required to file for that year.

Worked Example: $150,000 Portfolio, No T1135 Required

Rohan, a Toronto software engineer, holds US stocks in a non-registered Questrade account. He bought the positions between 2019 and 2022 for a total of CAD $82,000. By November 2026 the market value has grown to CAD $150,000.

Because the cost amount test looks at what Rohan paid, not what the holdings are worth, his aggregate cost of $82,000 remains below the $100,000 threshold. He generally does not need to file T1135 for 2026. He still has to report any US dividend income, interest and realized capital gains on his T1 return in the usual way.

Simplified vs. Detailed Reporting Methods

Your Pre-Year-End T1135 Roadmap

Running this check before December 31 gives you time to gather exchange-rate data and, if needed, discuss voluntary disclosure for prior years. See more tax insights from ClearWealth for related pre-year-end planning guides.

1. 1
   Inventory every foreign holdingNon-registered brokerage accounts, foreign bank accounts, rental property, loans to non-residents, foreign mutual funds. Leave out anything inside an RRSP, RRIF or TFSA.
2. 2
   Pull the cost amount for each holdingFor stocks, this is generally the adjusted cost base in Canadian dollars. Your brokerage may report cost in US dollars, so you may need to re-convert using historical Bank of Canada rates.
3. 3
   Find the highest aggregate cost reached during the yearNot just the December 31 figure. A spreadsheet with monthly totals typically makes this easier.
4. 4
   Classify each asset by countryThe T1135 schedule groups holdings by country of issuer or situs, so having this ready saves time at filing.
5. 5
   Choose your reporting methodUnder $250,000 of aggregate cost usually allows the Simplified Method; above $250,000 requires the Detailed Method.
6. 6
   File by April 30 (or June 15)For self-employed filers the deadline shifts to June 15. T1135 can generally be e-filed with your T1, but it is a separate schedule with its own penalty regime.

Common Mistakes Ontario Investors Make with T1135

• →Using year-end market value instead of aggregate cost amount to test the $100,000 threshold.
• →Assuming that because the brokerage is Canadian, US stocks held there do not count — they generally do when the account is non-registered.
• →Forgetting to report foreign dividend or interest income on the T1 return when below the cost threshold. No T1135 is not the same as no income reporting.
• →Converting the cost into Canadian dollars only once at year-end instead of on each acquisition date at the Bank of Canada rate.
• →Missing the "at any time during the year" wording. A mid-year spike above $100,000 can trigger filing even if the year-end balance drops below.
• →Filing the Simplified Method when aggregate cost exceeded $250,000 at any point in the year.
• →Assuming spouses on a joint account both get a $100,000 exemption. Each co-owner typically tests their own share of the cost amount.

Penalties and the Voluntary Disclosures Program

Missing T1135 is more expensive than most filers expect. Under section 162(7) of the Income Tax Act, the late-filing penalty is generally $25 per day, with a $100 minimum and a $2,500 cap. Additional penalties can apply for false statements or omissions, and gross-negligence penalties can reach 5 percent of the cost amount of the unreported property. CRA may also extend the reassessment period by up to three extra years for returns where T1135 was required.

Taxpayers who realize they should have filed T1135 in prior years can often use the Voluntary Disclosures Program (VDP). The program offers potential relief from penalties and partial interest relief, but acceptance is not automatic. CRA assesses each application against program eligibility, and the disclosure generally must be made before CRA contacts the taxpayer. This is one of the clearest cases where CRA dispute and voluntary disclosure support from a professional pays for itself.

Frequently Asked Questions

Sources & References

• Canada Revenue Agency — Form T1135, Foreign Income Verification Statement: canada.ca
• Canada Revenue Agency — Questions and answers about Form T1135: canada.ca
• Income Tax Act — sections 233.3 and 162(7): laws-lois.justice.gc.ca
• Canada Revenue Agency — Voluntary Disclosures Program: canada.ca
• Bank of Canada — Daily exchange rates: bankofcanada.ca