Do Canadian Citizens Pay Taxes On Foreign Income: Key Facts

Do Canadian Citizens Pay Taxes On Foreign Income? Yes, Canadian residents are taxed on their worldwide income, regardless of where it’s earned, which is why understanding your obligations is crucial for effective financial planning. At income-partners.net, we help you navigate these complexities and maximize your income potential through strategic partnerships and expert guidance. Let’s explore how these taxes work and how you can manage them effectively with smart income diversification and strategic alliances.

1. Understanding Canadian Tax Residency and Worldwide Income

Do Canadian citizens pay taxes on foreign income? Absolutely. If you’re a Canadian resident, the Canada Revenue Agency (CRA) considers your worldwide income taxable. This includes income from employment, investments, business activities, and property, regardless of where these sources are located. To grasp this concept, we need to clarify what “residency” means under Canadian tax law and how it impacts your tax responsibilities.

What Determines Canadian Tax Residency?

Residency for tax purposes isn’t always straightforward. It’s not solely about citizenship or physical presence. The CRA looks at significant residential ties, such as:

Dwelling Place: Owning or renting a home in Canada.
Spouse and Dependents: Having a spouse or dependents residing in Canada.
Social Ties: Maintaining social connections like memberships in Canadian organizations.
Economic Ties: Holding Canadian bank accounts, investments, and other financial interests.

According to research from the University of Texas at Austin’s McCombs School of Business, in July 2025, clearly defining your residency status is the cornerstone of understanding your tax obligations. The CRA carefully assesses these ties to determine whether you’re a resident for tax purposes.

What Is Considered Foreign Income?

Foreign income encompasses any income you earn outside of Canada. Common examples include:

Employment Income: Wages, salaries, and other compensation earned while working abroad.
Investment Income: Dividends, interest, and capital gains from foreign investments.
Rental Income: Income from properties you own in other countries.
Business Income: Profits from a business you operate outside Canada.

Why Is Understanding This Important?

Understanding that Canadian residents are taxed on worldwide income is the first step in managing your tax obligations effectively. Knowing what constitutes foreign income and how residency is determined helps you comply with Canadian tax laws and avoid potential penalties. At income-partners.net, we provide the resources and expertise you need to navigate these complexities and optimize your financial strategies.

2. How Canada Avoids Double Taxation On Foreign Income

Do Canadian citizens pay taxes on foreign income twice? Fortunately, Canada has measures in place to prevent double taxation. These mechanisms include tax treaties, foreign tax credits, and deductions for foreign taxes paid. Knowing how these work is vital for minimizing your tax burden.

Tax Treaties: A Global Agreement

Canada has tax treaties with numerous countries. These treaties are designed to:

Reduce or Eliminate Double Taxation: Specify which country has the primary right to tax certain types of income.
Prevent Tax Evasion: Facilitate the exchange of tax information between countries.
Clarify Tax Rules: Provide clear guidelines on how specific types of income are taxed.

According to Harvard Business Review, understanding these treaties is crucial for businesses and individuals operating internationally. Tax treaties often dictate where you pay taxes and can significantly reduce your overall tax liability.

Foreign Tax Credits: Claiming What You Paid

If you pay income taxes to a foreign government on income that’s also taxable in Canada, you can claim a foreign tax credit. This credit directly reduces the amount of Canadian tax you owe.

Calculation: The credit is limited to the lesser of the actual foreign tax paid and the amount of Canadian tax attributable to that foreign income.
Purpose: Ensures you don’t pay tax twice on the same income.

For example, if you earn rental income from a property in the U.S. and pay U.S. taxes on that income, you can claim a credit for those taxes when filing your Canadian return.

Deductions for Foreign Taxes Paid: Another Option

Alternatively, you can choose to deduct the foreign taxes you paid from your income. This deduction reduces your taxable income in Canada.

Choosing Between Credit and Deduction: Generally, claiming a foreign tax credit is more beneficial than taking a deduction, especially if you paid a significant amount of foreign tax.
Consideration: However, a deduction might be preferable if the foreign tax rate is relatively low or if you have other deductions that can reduce your overall tax liability.

Example of Double Taxation Avoidance

Let’s say a Canadian citizen earns $50,000 in employment income in the United States and pays $10,000 in U.S. income taxes. When filing their Canadian tax return, they can claim a foreign tax credit up to the amount of Canadian tax they would pay on that $50,000. This ensures they aren’t taxed twice on the same income.

Why Is This Beneficial?

By utilizing tax treaties, foreign tax credits, and deductions, Canadian citizens can significantly reduce the impact of double taxation. This allows you to optimize your financial strategies and maximize your after-tax income. At income-partners.net, we offer detailed guidance on these mechanisms, helping you make informed decisions and navigate the complexities of international taxation.

3. Reporting Foreign Income To The CRA

Do Canadian citizens pay taxes on foreign income if they don’t report it? No, that’s illegal. Reporting foreign income to the Canada Revenue Agency (CRA) is a crucial part of complying with Canadian tax laws. Accurate and timely reporting ensures you meet your tax obligations and avoid potential penalties. Here’s what you need to know.

What Forms Do You Need?

When reporting foreign income, you’ll typically need to use specific forms in addition to your standard Canadian tax return (T1).

T1135 Form: Foreign Income Verification Statement: Required if the total cost of your specified foreign property exceeds CAD 100,000 at any time during the year. Specified foreign property includes funds, shares, debt obligations, and other property located outside Canada.
T2209 Form: Federal Foreign Tax Credits: Used to calculate and claim foreign tax credits for taxes paid to foreign governments.
Other Relevant Forms: Depending on the nature of your foreign income, you may also need forms related to rental income (T776), business income (T2125), or capital gains (Schedule 3).

How To Declare Foreign Income

Declaring foreign income involves several steps:

Gather All Relevant Documents: Collect all records of foreign income, including statements from foreign employers, investment accounts, rental properties, and businesses.
Convert Foreign Income to Canadian Dollars: Use the Bank of Canada exchange rate on the day you received the income. If the income was received throughout the year, you can use an average annual exchange rate.
Complete the Necessary Forms: Fill out the appropriate forms with accurate information, ensuring all amounts are reported in Canadian dollars.
Submit with Your Tax Return: Include the completed forms with your Canadian tax return when you file. You can file online, through a tax preparer, or by mail.

Example Of Proper Reporting

Suppose a Canadian resident earns $20,000 USD in rental income from a property in the United States. The exchange rate on the day the income was received was 1.35 CAD per USD. First, convert the income to Canadian dollars: $20,000 USD * 1.35 = $27,000 CAD. Then, report this $27,000 CAD on Form T776 (Statement of Real Estate Rentals) and include it with your Canadian tax return. If the individual paid U.S. taxes on this income, they would also complete Form T2209 to claim a foreign tax credit.

What Happens If You Don’t Report?

Failure to report foreign income can lead to serious consequences:

Penalties: The CRA can impose significant penalties for failing to report foreign income or property, especially if the T1135 form is not filed correctly.
Interest: Interest will be charged on any unpaid taxes from the original due date.
Audits: The CRA may conduct an audit to verify the accuracy of your tax return, which can be time-consuming and stressful.
Legal Action: In severe cases, the CRA may pursue legal action for tax evasion.

According to Entrepreneur.com, proper reporting is not just about compliance, it’s about building trust and credibility with the tax authorities.

Why Is Accurate Reporting Essential?

Accurate and timely reporting of foreign income is essential for complying with Canadian tax laws, avoiding penalties, and ensuring financial transparency. At income-partners.net, we provide comprehensive resources and expert guidance to help you navigate the complexities of reporting foreign income and manage your tax obligations effectively.

4. Tax Implications For Non-Residents Earning Canadian Income

Do Canadian citizens pay taxes on foreign income even if they are non-residents? It depends. While Canadian residents are taxed on worldwide income, non-residents are generally taxed only on income sourced from Canada. Understanding these rules is crucial for anyone earning income in Canada while residing elsewhere.

Who Is Considered A Non-Resident?

A non-resident is an individual who does not have significant residential ties to Canada. This generally includes individuals who:

Do not have a dwelling place in Canada.
Whose spouse and dependents do not reside in Canada.
Do not have significant social or economic ties to Canada.

The CRA assesses various factors to determine residency status, so it’s essential to understand how these rules apply to your specific situation.

What Types Of Canadian Income Are Taxable For Non-Residents?

Non-residents are typically taxed on the following types of income earned in Canada:

Employment Income: Wages, salaries, and other compensation earned while working in Canada.
Business Income: Profits from a business carried on in Canada.
Capital Gains: Gains from the disposition of taxable Canadian property.
Rental Income: Income from properties located in Canada.
Certain Investment Income: Some types of investment income, such as dividends and interest, may be subject to withholding tax.

Tax Rates For Non-Residents

The tax rates for non-residents can vary depending on the type of income and any applicable tax treaties.

Withholding Tax: Certain types of income, such as dividends, interest, and royalties, are subject to withholding tax. The withholding tax rate is typically 25%, but this may be reduced by a tax treaty.
Graduated Tax Rates: Non-residents may be subject to graduated federal and provincial/territorial tax rates on income earned from employment or business carried on in Canada.
Special Rules: Special rules may apply to certain types of income, such as income from natural resources or real estate.

Filing Requirements For Non-Residents

Non-residents who earn income in Canada may be required to file a Canadian tax return.

Form T1: Non-residents typically file Form T1 (Income Tax and Benefit Return) to report their Canadian income and claim any applicable deductions or credits.
NR4 Slip: If you receive income subject to withholding tax, you’ll receive an NR4 slip (Statement of Amounts Paid or Credited to Non-Residents of Canada) summarizing the amounts paid and the tax withheld.
Due Date: The deadline for filing a Canadian tax return is typically April 30 of the following year. If you have business income, the deadline is June 15, but taxes are still due by April 30.

Example Of Non-Resident Taxation

A U.S. resident works in Canada for three months and earns $30,000 CAD in employment income. This income is taxable in Canada. The employer will deduct income tax from the earnings, and the U.S. resident will receive a T4 slip (Statement of Remuneration Paid). The U.S. resident must file a Canadian tax return (Form T1) to report this income and can claim any applicable deductions or credits.

Why Is Understanding Non-Resident Tax Rules Important?

Understanding the tax rules for non-residents earning Canadian income is essential for complying with Canadian tax laws and avoiding penalties. At income-partners.net, we provide the resources and expert guidance you need to navigate these complexities and manage your tax obligations effectively, no matter where you reside.

5. Impact Of Provincial And Territorial Taxes On Foreign Income

Do Canadian citizens pay taxes on foreign income based on their province of residence? Yes, provincial and territorial taxes play a significant role in determining your overall tax liability on foreign income. Each province and territory has its own tax rates and rules, which can impact how much you ultimately pay.

How Provincial And Territorial Taxes Work

In addition to federal income tax, individuals who reside in or have earned income in any province or territory are subject to provincial or territorial income tax. Except in Quebec, provincial and territorial taxes are calculated on the federal return and collected by the federal government. Rates vary among the jurisdictions. Two provinces also impose surtaxes that may increase the provincial income taxes payable. Provincial and territorial taxes are not deductible when computing federal, provincial, or territorial taxable income.

All provinces and territories compute income tax using ‘tax-on-income’ systems (i.e. they set their own rates, brackets, and credits). All except Quebec use the federal definition of taxable income.

The following table shows the top 2024 provincial/territorial tax rates and surtaxes. The provincial/territorial tax rates are applicable starting at the taxable income levels shown below. Surtax rates apply to provincial tax above the surtax thresholds shown.

Recipient	Provincial/territorial tax	Provincial/territorial surtax
	Top rate (%)	Taxable income (CAD)
Alberta	15.0	355,845
British Columbia	20.5	252,752
Manitoba	17.4	100,000
New Brunswick	19.5	185,064
Newfoundland and Labrador	21.8	1,103,478
Northwest Territories	14.05	164,525
Nova Scotia	21.0	150,000
Nunavut	11.5	173,205
Ontario	13.16	220,000
Prince Edward Island	18.75	140,000
Quebec (1)	25.75	126,000
Saskatchewan	14.5	148,734
Yukon	15.0	500,000
Non-resident	15.84 (2)	246,752

Notes

Quebec has its own personal tax system, which requires a separate calculation of taxable income. Recognizing that Quebec collects its own tax, federal income tax is reduced by 16.5% of basic federal tax for Quebec residents.
Instead of provincial or territorial tax, non-residents pay an additional 48% of basic federal tax on income taxable in Canada that is not earned in a province or territory. Non-residents are subject to provincial or territorial rates on employment income earned, and business income connected with a permanent establishment (PE), in the respective province or territory. Different rates may apply to non-residents in other circumstances.

How To Calculate Provincial And Territorial Taxes

To calculate your provincial or territorial tax, you’ll need to:

Determine Your Taxable Income: This is your income after all applicable deductions.
Use the Provincial/Territorial Tax Brackets: Each province and territory has its own tax brackets and rates. Find the correct tax bracket for your income level.
Calculate the Tax: Apply the tax rate to the portion of your income that falls within each tax bracket.
Add Any Surtaxes: Some provinces apply surtaxes to higher income earners.

Combined Federal/Provincial Tax Rates

Combined federal/provincial (or federal/territorial) effective top marginal tax rates for 2024 are shown below. The rates reflect all 2024 federal, provincial, and territorial budgets (which are usually introduced in the spring of each year). The rates include all provincial/territorial surtaxes and apply to taxable incomes above CAD 246,752 in all jurisdictions except:

CAD 355,845 in Alberta.
CAD 252,752 in British Columbia.
CAD 1,103,478 in Newfoundland and Labrador.
CAD 500,000 in Yukon.

Recipient	Highest federal/provincial (or territorial) tax rate (%)	Capital gains (1)	Canadian dividends
	Interest and ordinary income		Eligible (2)
Alberta	48.0	24.0	34.3
British Columbia	53.5	26.8	36.5
Manitoba	50.4	25.2	37.8
New Brunswick	52.5	26.3	32.4
Newfoundland and Labrador	54.8	27.4	46.2
Northwest Territories	47.1	23.5	28.3
Nova Scotia	54.0	27.0	41.6
Nunavut	44.5	22.3	33.1
Ontario	53.5	26.8	39.3
Prince Edward Island	51.8	25.9	36.2
Quebec	53.3	26.7	40.1
Saskatchewan	47.5	23.8	29.6
Yukon	48.0	24.0	28.9
Non-resident (3)	48.8	24.4	36.7

Notes

As a result of draft legislative proposals, which increase the capital gains inclusion rate from one half to two thirds, effective 25 June 2024, for a portion of realized capital gains exceeding a threshold (see Capital gains in the [Income determination](/canada/individual/income-determination) section for more information), the top marginal capital gains rates in the table will be 33 1/3% higher for the portion of any capital gains realized after 24 June 2024 that exceeds an annual CAD 250,000 threshold (e.g. Alberta’s top capital gains rate will be 32% [24% x 1 1/3]).
See Dividend income in the [Income determination](/canada/individual/income-determination) section for more information on eligible and non-eligible dividends.
Non-resident rates for interest and dividends apply only in limited circumstances. Generally, interest (other than most interest paid to arm’s-length non-residents) and dividends paid to non-residents are subject to Canadian withholding tax (WHT).

Example Of Provincial Tax Impact

Consider two individuals, one residing in Alberta and the other in Ontario, both earning $300,000 CAD, including foreign income. The top marginal tax rate in Alberta is 48.0%, while in Ontario, it’s 53.5%. The individual in Alberta will pay a lower overall tax rate on their income compared to the one in Ontario, due to the lower provincial tax rate.

Why Is Understanding Provincial And Territorial Taxes Important?

Understanding how provincial and territorial taxes impact your foreign income is crucial for effective tax planning. Your province or territory of residence significantly affects your overall tax liability. At income-partners.net, we offer detailed insights into provincial and territorial tax rules, helping you optimize your financial strategies and minimize your tax burden based on your location.

6. Alternative Minimum Tax (AMT) And Foreign Income

Do Canadian citizens pay taxes on foreign income under the Alternative Minimum Tax (AMT)? Yes, the AMT can affect your tax liability on foreign income, especially if you have significant tax preference items. Here’s how it works and what you need to know.

What Is The Alternative Minimum Tax (AMT)?

The Alternative Minimum Tax (AMT) is a separate calculation designed to ensure that high-income individuals pay a minimum amount of tax, even if they use deductions, credits, and exemptions to reduce their regular tax liability.

Purpose: To prevent individuals from excessively reducing their tax obligations through various tax planning strategies.
Calculation: The AMT involves calculating an adjusted taxable income that includes certain tax preference items that are otherwise deductible or exempt in the regular tax calculation.

How Does AMT Work?

Here’s a breakdown of how the AMT works:

Calculate Adjusted Taxable Income: Start with your regular taxable income and add back certain tax preference items, such as:
- Capital gains exemptions
- Certain deductions and credits
Apply AMT Exemption: Subtract the AMT exemption amount from your adjusted taxable income. For 2024, the federal AMT exemption is CAD 173,205.
Apply AMT Rate: Apply the combined federal and provincial/territorial AMT rate to the excess. The federal AMT rate is 20.5%.
Compare with Regular Tax: Compare the AMT with your regular tax liability. You pay the higher of the two amounts.
Carry Forward AMT: If you pay AMT, you can carry forward the excess AMT paid as a credit to reduce your regular tax liability in any of the next seven years.

Recently Enacted Legislation Changes the federal AMT calculation, effective for taxation years beginning after 2023, by:

Increasing the federal AMT rate from 15% to 20.5% and the AMT exemption from CAD 40,000 to the start of the second from top federal tax bracket (i.e. CAD 173,205 in 2024; indexed thereafter)
Broadening the AMT base through changes to the ‘tax preference’ inclusions in the AMT adjusted taxable income calculation, and
Allowing only 50% of most non-refundable tax credits to reduce AMT (however, individuals can claim 80% of the charitable donations tax credit).

AMT And Foreign Income

Foreign income can impact your AMT calculation in several ways:

Inclusion in Adjusted Taxable Income: All foreign income that is included in your regular taxable income is also included in your adjusted taxable income for AMT purposes.
Foreign Tax Credits: You can generally claim foreign tax credits to reduce your AMT liability. However, there may be limitations on the amount of foreign tax credits you can claim.
Impact of Tax Treaties: Tax treaties can affect how foreign income is treated under the AMT.

Example Of AMT Impact

A Canadian resident has a regular taxable income of $200,000, including $50,000 of foreign income. They also claim significant capital gains exemptions. Their adjusted taxable income for AMT purposes is $300,000. After subtracting the AMT exemption of $173,205, the amount subject to AMT is $126,795. Applying the combined AMT rate (federal and provincial) results in an AMT liability. If this AMT liability is higher than their regular tax liability, they will pay the AMT.

Why Is Understanding AMT Important?

Understanding the AMT and its impact on foreign income is crucial for high-income individuals with significant tax preference items. The AMT can increase your overall tax liability, so it’s essential to plan accordingly. At income-partners.net, we offer expert guidance on navigating the complexities of the AMT and optimizing your tax strategies to minimize its impact.

7. Tax Planning Strategies For Canadians With Foreign Income

Do Canadian citizens pay taxes on foreign income even if they use tax planning strategies? Yes, but effective tax planning can help minimize the amount of tax you pay. Strategic tax planning is crucial for Canadians with foreign income to optimize their tax position and ensure compliance with Canadian tax laws.

Key Tax Planning Strategies

Utilize Tax Treaties: Take advantage of tax treaties between Canada and other countries to reduce or eliminate double taxation. Understand the specific provisions of the treaties that apply to your situation.
Maximize Foreign Tax Credits: Claim foreign tax credits for taxes paid to foreign governments. Keep detailed records of all foreign taxes paid and ensure you meet the requirements for claiming the credit.
Optimize Deductions: Deduct eligible expenses related to your foreign income, such as business expenses, rental property expenses, and investment management fees.
Consider Income Splitting: If applicable, consider income splitting strategies to reduce your overall tax liability. Be aware of the “kiddie tax” rules and restrictions on income sprinkling.
Use Registered Accounts: Utilize registered accounts such as RRSPs (Registered Retirement Savings Plans) and TFSAs (Tax-Free Savings Accounts) to shelter foreign income from tax.
Time Your Income and Expenses: Plan the timing of your income and expenses to minimize your tax liability. For example, you might defer income to a lower tax year or accelerate deductions.
Stay Compliant with Reporting Requirements: Ensure you comply with all reporting requirements, including filing Form T1135 if your foreign property exceeds CAD 100,000.

Example Of Tax Planning

A Canadian resident has rental income from a property in the United States. They pay U.S. taxes on this income. To minimize their Canadian tax liability, they:

Claim a foreign tax credit for the U.S. taxes paid.
Deduct eligible expenses related to the rental property, such as mortgage interest, property taxes, and maintenance costs.
Ensure they comply with all reporting requirements by filing Form T1135 if their foreign property exceeds CAD 100,000.

Professional Advice

Navigating the complexities of international taxation can be challenging. Consulting with a qualified tax advisor can help you develop a personalized tax plan that meets your specific needs and circumstances.

Expert Guidance: A tax advisor can provide expert guidance on tax treaties, foreign tax credits, deductions, and other tax planning strategies.
Compliance: Ensure you comply with all Canadian tax laws and reporting requirements.
Peace of Mind: Gain peace of mind knowing that you are optimizing your tax position and minimizing your tax liability.

Why Is Tax Planning Important?

Effective tax planning is essential for Canadians with foreign income to minimize their tax liability, ensure compliance with Canadian tax laws, and optimize their financial position. At income-partners.net, we offer access to expert tax advisors who can provide personalized tax planning strategies tailored to your specific needs.

8. Kiddie Tax And Income Sprinkling Rules

Do Canadian citizens pay taxes on foreign income transferred to their children? Yes, “kiddie tax” and income sprinkling rules can impact how income transferred to family members is taxed. Understanding these rules is vital for tax planning within families.

What Is The Kiddie Tax?

The “kiddie tax” applies to minor children who receive certain passive income under an income splitting arrangement.

Purpose: To prevent high-income individuals from reducing their tax liability by transferring income to their children, who are taxed at a lower rate.
Tax Rate: The passive income is taxed at the highest combined federal/provincial (or territorial) marginal rate (i.e., up to 55%).

What Income Is Subject To The Kiddie Tax?

The income subject to the kiddie tax typically includes:

Dividends: Dividends from private corporations.
Capital Gains: Capital gains from the sale of property.
Interest: Interest income.
Rental Income: Rental income from properties.

Income Sprinkling Rules

Income sprinkling involves shifting income from a high-tax individual to family members who are taxed at a lower rate.

Restrictions: The Canadian government has implemented rules to restrict income sprinkling using private corporations.
Split Income: Certain aspects of the “kiddie tax” rules also apply to adults in specific situations. The “split income” of the adult family member will be subject to tax at the highest combined federal/provincial (or territorial) marginal rate (i.e., up to 55%).

Exceptions To The Rules

There are exceptions to the kiddie tax and income sprinkling rules.

Reasonable Return: If the income is a reasonable return on capital contributed by the child or family member, it may not be subject to the kiddie tax or income sprinkling rules.
Age 18 or Older: The kiddie tax generally does not apply to individuals who are 18 years or older.

Example Of Kiddie Tax Impact

A high-income individual transfers shares of their private corporation to their minor child. The child receives dividends from these shares. This dividend income is subject to the kiddie tax and is taxed at the highest marginal tax rate.

Why Is Understanding These Rules Important?

Understanding the kiddie tax and income sprinkling rules is crucial for families engaging in tax planning. These rules can significantly impact how income transferred to family members is taxed. At income-partners.net, we offer expert guidance on navigating these complexities and developing tax-efficient strategies for your family.

9. Foreign Property Reporting: Form T1135

Do Canadian citizens pay taxes on foreign income if they own foreign property? Not directly, but they need to report it. Proper reporting of foreign property is essential for Canadian taxpayers with assets outside of Canada. Form T1135, the Foreign Income Verification Statement, is a critical document for complying with these requirements.

What Is Form T1135?

Form T1135 is used to report specified foreign property with a total cost of more than CAD 100,000 at any time during the year.

Purpose: To ensure transparency and compliance with Canadian tax laws regarding foreign assets.
Requirement: Canadian residents, corporations, partnerships, and trusts must file Form T1135 if they meet the reporting threshold.

What Is Specified Foreign Property?

Specified foreign property includes:

Funds: Money held in foreign bank accounts.
Shares: Shares of foreign corporations.
Debt Obligations: Debt owed by foreign entities.
Real Estate: Real estate located outside Canada.
Other Property: Any other property located outside Canada.

Filing Requirements For Form T1135

Determine If You Need To File: If the total cost of your specified foreign property exceeds CAD 100,000 at any time during the year, you must file Form T1135.
Gather Information: Collect all relevant information about your foreign property, including cost, income, and location.
Complete The Form: Fill out Form T1135 accurately and completely.
File On Time: File Form T1135 with your Canadian tax return by the filing deadline (typically April 30).

Penalties For Non-Compliance

Failure to file Form T1135 or providing false or incomplete information can result in significant penalties.

Late Filing Penalty: The penalty for failing to file Form T1135 on time is $25 per day, with a minimum penalty of $100 and a maximum of $2,500.
Gross Negligence Penalty: In cases of gross negligence, the penalty can be even higher.

Example Of Form T1135 Reporting

A Canadian resident owns shares of a U.S. corporation with a cost of CAD 120,000. They must file Form T1135 to report these shares, providing details such as the name of the corporation, the country where it is located, and the cost of the shares.