Three separate things, often conflated
Most newcomer confusion here comes from treating three independent matters as one:
- Transferring money into Canada — moving your own funds from an overseas account. Not income, not taxed, no limit. Banks report cross-border transfers over $10,000 to FINTRAC as routine anti-money-laundering compliance. That is not a tax event and requires nothing from you.
- Foreign income — rent, interest, dividends and capital gains generated by foreign assets after you become a tax resident. Reportable on your Canadian return, whether or not the money is brought here.
- Foreign asset reporting (T1135) — an information return, not a tax. You are telling the CRA what you hold abroad. Filing it does not create tax; failing to file it creates serious problems.
The most common error is the second: "the money never came to Canada, so it isn't reportable." Canada taxes the income, not the transfer. Interest earned in an overseas account is reportable once you are a resident, even if you never touch it.
T1135: when you have to file
If the total cost amount of your specified foreign property exceeds CAD $100,000 at any point during the year, you must file Form T1135.
Three details people get wrong:
- It is cost, not market value. Crossing $100,000 mid-year triggers the filing even if the value falls back below by December.
- It is the total, not per item. Three overseas accounts of $40,000 each is $120,000 and over the line.
- Newcomers are exempt in year one. The CRA states plainly that an individual does not have to file Form T1135 for the tax year in which they first became resident in Canada. It starts the following year.
What counts and what doesn't
| Reportable | Not reportable |
|---|
| Foreign bank accounts and deposits | Foreign real estate for personal use |
| Foreign rental property | Personal-use property (car, jewellery, art) |
| Shares of non-Canadian companies, even held at a Canadian broker | Anything inside a Canadian registered account — RRSP, TFSA, RESP |
| Foreign bonds, and debts owed to you by non-residents | Assets used in an active foreign business |
| Interests in foreign trusts | |
Note row three: US stocks bought through a Canadian brokerage are still specified foreign property. And anything inside an RRSP or TFSA is exempt — a rarely mentioned advantage of registered accounts.
How "cost amount" is set — the paragraph that saves you money
For newcomers this is the most valuable section on the page.
When you become a Canadian tax resident, your assets are treated as reacquired at their fair market value on that day — a deemed acquisition. That value becomes both the "cost amount" for T1135 and your cost base for capital gains when you eventually sell.
a property bought abroad in 2005 for the equivalent of $200,000
worth $800,000 on your landing day
→ Canadian tax law treats your cost as $800,000, not $200,000
→ on a later sale, only the gain above $800,000 is a Canadian capital gain
In other words, everything your assets gained before you immigrated is outside Canada's reach — provided you can prove the value on the day you arrived.
As soon as you land, obtain and keep: a formal valuation or comparable-sales evidence for any property, statements for every investment account dated around your landing day, balance confirmations for foreign currency deposits, and the exchange rate for that date. When you sell that property a decade from now this file may be worth tens of thousands of dollars in tax. Reconstructing a valuation after the fact is much harder and far easier for the CRA to challenge.
How serious are the penalties?
Not nominal. Beyond the late-filing and incomplete-information penalties, there is a consequence people overlook: if you both failed to report income from specified foreign property and did not file T1135 correctly, the CRA's reassessment period for that year is extended by three years. Years you assumed were closed reopen.
If you discover you have missed filings, the CRA operates a Voluntary Disclosures Program. Coming forward before the CRA contacts you generally means penalties are waived and you pay tax and interest only. Speak to an accountant who handles cross-border work rather than attempting it alone.
Other cross-border issues that catch people
Foreign retirement accounts
Treatment varies enormously depending on whether Canada has a tax treaty with the country and on the nature of the plan. Some require annual income reporting; others can be deferred. This is the area where general rules help least and professional advice is most worth paying for.
Renting out property abroad
Rental income after you become a resident is reportable in Canada, related expenses are deductible, and tax already paid locally can usually be claimed as a foreign tax credit to avoid double taxation. The property itself also counts toward the T1135 threshold.
If you remain a taxpayer elsewhere
US citizens and green card holders must file with the IRS wherever they live, including after becoming Canadian tax residents. Dual filing obligations need an accountant familiar with both systems.
A short version, if you want one
Bringing your own money into Canada is neither taxed nor reportable, though banks routinely report transfers over $10,000 for anti-money-laundering purposes. Once you are a tax resident, income from foreign assets is reportable whether or not the money comes here. Foreign property with a total cost over CAD $100,000 requires Form T1135, but you are exempt for the year you became a resident. Most importantly: document the market value of every foreign asset as of your landing date — that is your cost base, and it determines how much Canadian capital gains tax you pay when you sell. If the amounts are significant, an accountant with cross-border experience will more than pay for themselves.
Back to the series: Your first year of money in Canada · TFSA and RRSP for newcomers
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