Canada proposes doubling Form T1135 foreign-property threshold

The statutory threshold would double

The proposal appears in a Notice of Ways and Means Motion that would replace the “reporting entity” definition in section 233.3(1) of the Income Tax Act. It is draft legislation rather than an enacted change. The current definition generally treats a specified Canadian entity as a reporting entity where the total cost amount of its specified foreign property exceeds C$100,000 at any time while it is resident in the relevant taxation year or fiscal period.^[3][4]

Who is within the reporting rule

The current Form T1135 requirement can apply to Canadian-resident individuals, corporations and certain trusts, as well as specified Canadian partnerships. Specified foreign property includes funds or intangible property held outside Canada, shares of non-resident corporations, interests in non-resident trusts and debts owed by non-residents. The statutory definition excludes specified categories, including property used or held exclusively in an active business and shares or debt of a foreign affiliate for the relevant foreign-affiliate reporting purpose.^[4]

Filing and simplified-reporting effects

Under the motion, the filing trigger would become a total cost amount exceeding C$200,000 at any time in a taxation year or fiscal period ending after 2026. Separately, the Budget supplementary information says the Canada Revenue Agency would raise the threshold for simplified Part A reporting from property costing less than C$250,000 throughout the period to less than C$500,000. The draft statutory motion contains the C$200,000 filing threshold; the C$500,000 administrative change still requires a revised form and instructions.^[2][3]

Compliance implications

The measure changes an information-reporting threshold, not the tax treatment of foreign income. Foreign income remains subject to the ordinary income-tax rules even where no Form T1135 is required. The test uses aggregate cost amount rather than current fair market value and must be monitored throughout the period. The existing filing-date rule in section 233.3(3)—generally the entity’s return filing date, with a separate partnership rule—is not amended by the motion.^[2][3][4]

Canadian groups should identify their specified Canadian entities, distinguish active-business and foreign-affiliate property from reportable assets, and retain cost records capable of testing both thresholds. They should continue using the current C$100,000 filing and C$250,000 simplified-reporting thresholds until legislation is enacted and the CRA publishes the revised Form T1135 and instructions.^[2][3][4]