Does CRA actually grant T1135 filing extensions?

Not in the way people expect. There is no formal 'extension request' process for T1135 comparable to what exists for some income tax situations. CRA does not have a standard mechanism to pre-approve a later filing deadline. What actually happens when Canadians ask about 'extensions' is one of two things: either they file by the deadline and don't need an extension, or they file late and are subject to the automatic penalty. The exception is if you have a documented, extraordinary circumstance (serious illness, natural disaster, death in the family) that prevented timely filing — in that case you can submit a fairness request (Form RC4288) to CRA asking for penalty and interest relief based on reasonable circumstances. This is not an extension; it's a retroactive penalty waiver. The VDP is the planned mechanism for taxpayers who have multiple years of unfiled T1135s and want to regularize their situation with penalty relief.

What exactly is specified foreign property for T1135 purposes?

Specified foreign property (SFP) under s.233.3 of the Income Tax Act includes a broad range of foreign assets: (1) Real property located outside Canada — including residential property, commercial property, undeveloped land, and fractional ownership interests; (2) Funds held in foreign bank accounts; (3) Shares of foreign corporations (including foreign ETFs and stocks on foreign exchanges held in non-registered accounts); (4) Indebtedness owed to you by a non-resident; (5) Interests in foreign partnerships; (6) Interests in offshore trusts; (7) Cryptocurrency held on foreign exchanges. Notable exclusions from SFP: (a) Property used exclusively in an active business; (b) Shares of a Canadian company (even if it has foreign operations); (c) RRSPs/TFSAs/RRIFs/pension plans holding foreign securities — the registered plan itself is not SFP; (d) Personal-use property with a cost under $100,000; (e) Property of a foreign affiliate. The $100,000 threshold is calculated on the aggregate cost of all SFP together — not per individual asset. If you have a $60,000 foreign condo and $50,000 in a US brokerage account, your total SFP cost is $110,000 and T1135 is required.

What does the T1135 form actually require me to disclose?

The T1135 has two methods of reporting depending on the total cost of your foreign property. The simplified method (for property with aggregate cost between $100,000 and $250,000) requires: type of property, country where held, gross income from property, and maximum cost during the year for each category of asset. The detailed method (required when aggregate cost exceeds $250,000, or optionally for simpler situations) requires: for each individual asset — its description, country, maximum cost during the year, income generated, and whether it was held at year-end. For a Mexican condo purchased for $150,000 CAD, the simplified method would suffice in most years. The key numbers needed: the original cost in CAD (purchase price plus acquisition costs at the exchange rate on closing day), and any rental income earned from the property. The T1135 is a disclosure form — it does not trigger tax on its own. Tax obligations from foreign rental income are reported separately on your T1 return Schedule T1135 does not substitute for the rental income schedule.

I've owned a Mexican condo since 2018 and never filed a T1135. What should I do?

You have late T1135 filings for potentially 7 years (2018–2024, assuming you didn't file for any of them). The maximum basic penalty exposure is 7 × $2,500 = $17,500 in standard late-filing penalties — but the gross negligence risk is larger if CRA determines the non-filing was deliberate. The recommended path: (1) Confirm CRA has not yet contacted you about your foreign property — check your CRA My Account for any correspondence, and check your mail. (2) Engage a tax lawyer or CPA with VDP experience before doing anything else. (3) Determine whether you had unreported rental income from the condo in any of those years — if so, the VDP needs to address both the T1135 late filings and the unreported income. (4) Apply under VDP Track 1 for penalty waiver across all affected years. The cost of professional help and back interest (if any income was unreported) will likely be far less than the accrued penalties under the standard late-filing schedule, especially with VDP relief. Don't wait — VDP eligibility ends the moment CRA contacts you about this issue.

Can I just file the late T1135s without going through the VDP?

Yes — filing late T1135s without a formal VDP application is always an option and is sometimes the right approach. If you have only 1–2 years of late filings, the maximum basic penalty is $2,500–$5,000, and the professional cost of a VDP application might approach or exceed the penalty amount. In those cases, simply filing the late T1135s, paying the standard penalties, and potentially submitting a fairness request (RC4288) for penalty waiver based on reasonable circumstances may be more cost-effective. However, if you have 3+ years of late filings, significant unreported rental income, or any risk of CRA interpreting the non-filing as gross negligence rather than simple oversight, the VDP provides meaningful protection that justifies the professional cost. The key factor: if you had unreported foreign rental income alongside the T1135 non-filings, you need the VDP to address both simultaneously. Filing late T1135s without disclosing the accompanying unreported income creates a disclosure asymmetry that CRA may use to open a broader audit.

What is the 10-year extended reassessment period for T1135 and how does it differ from normal?

For most T1 income tax issues, CRA can reassess within 3 years of the date of the initial Notice of Assessment (the 'normal reassessment period'). For serious non-compliance or misrepresentation, the normal period can be extended, but there is generally a 4-year absolute limit for most individuals. T1135 operates differently: CRA has explicitly extended the reassessment period for foreign income verification failures to 10 years from the date the return was filed (or, if not filed at all, 10 years from when it was due). This means if you didn't file a T1135 for 2016 (due April 30, 2017), CRA can still reassess you for that year until April 30, 2027. This 10-year window is the statutory backstop that makes historical T1135 non-compliance significantly more dangerous than most other tax compliance gaps. It is also the reason that VDP applications for T1135 need to go back the full 10 years — selectively disclosing recent years while hoping CRA doesn't look further back is not a viable strategy. A complete VDP disclosure covering all affected years within the lookback window is the only way to genuinely regularize the situation.

Does the T1135 obligation apply to property I hold through a corporation or trust?

Corporations and trusts have their own T1135 obligations separate from individual shareholders or beneficiaries. A Canadian corporation that owns specified foreign property with aggregate cost over $100,000 CAD must file a T1135 for that corporation's tax year — the individual shareholder does not report the corporate foreign property on their personal T1135. However, if you personally hold foreign property through a foreign corporation or trust (rather than through a Canadian entity), the analysis becomes more complex — interests in foreign entities can themselves be SFP. Additionally, Canadians with significant interests in foreign corporations may have T1134 obligations (interests in foreign affiliates) separate from T1135. If your foreign property ownership structure involves any corporate or trust layer — whether Canadian or foreign — get professional advice before filing, as the reporting obligations are multi-layered and errors on corporate filings carry their own penalty schedule.

Does CRA actually grant T1135 filing extensions?

Not in the way people expect. There is no formal 'extension request' process for T1135 comparable to what exists for some income tax situations. CRA does not have a standard mechanism to pre-approve a later filing deadline. What actually happens when Canadians ask about 'extensions' is one of two things: either they file by the deadline and don't need an extension, or they file late and are subject to the automatic penalty. The exception is if you have a documented, extraordinary circumstance (serious illness, natural disaster, death in the family) that prevented timely filing — in that case you can submit a fairness request (Form RC4288) to CRA asking for penalty and interest relief based on reasonable circumstances. This is not an extension; it's a retroactive penalty waiver. The VDP is the planned mechanism for taxpayers who have multiple years of unfiled T1135s and want to regularize their situation with penalty relief.

What exactly is specified foreign property for T1135 purposes?

Specified foreign property (SFP) under s.233.3 of the Income Tax Act includes a broad range of foreign assets: (1) Real property located outside Canada — including residential property, commercial property, undeveloped land, and fractional ownership interests; (2) Funds held in foreign bank accounts; (3) Shares of foreign corporations (including foreign ETFs and stocks on foreign exchanges held in non-registered accounts); (4) Indebtedness owed to you by a non-resident; (5) Interests in foreign partnerships; (6) Interests in offshore trusts; (7) Cryptocurrency held on foreign exchanges. Notable exclusions from SFP: (a) Property used exclusively in an active business; (b) Shares of a Canadian company (even if it has foreign operations); (c) RRSPs/TFSAs/RRIFs/pension plans holding foreign securities — the registered plan itself is not SFP; (d) Personal-use property with a cost under $100,000; (e) Property of a foreign affiliate. The $100,000 threshold is calculated on the aggregate cost of all SFP together — not per individual asset. If you have a $60,000 foreign condo and $50,000 in a US brokerage account, your total SFP cost is $110,000 and T1135 is required.

What does the T1135 form actually require me to disclose?

The T1135 has two methods of reporting depending on the total cost of your foreign property. The simplified method (for property with aggregate cost between $100,000 and $250,000) requires: type of property, country where held, gross income from property, and maximum cost during the year for each category of asset. The detailed method (required when aggregate cost exceeds $250,000, or optionally for simpler situations) requires: for each individual asset — its description, country, maximum cost during the year, income generated, and whether it was held at year-end. For a Mexican condo purchased for $150,000 CAD, the simplified method would suffice in most years. The key numbers needed: the original cost in CAD (purchase price plus acquisition costs at the exchange rate on closing day), and any rental income earned from the property. The T1135 is a disclosure form — it does not trigger tax on its own. Tax obligations from foreign rental income are reported separately on your T1 return Schedule T1135 does not substitute for the rental income schedule.

I've owned a Mexican condo since 2018 and never filed a T1135. What should I do?

You have late T1135 filings for potentially 7 years (2018–2024, assuming you didn't file for any of them). The maximum basic penalty exposure is 7 × $2,500 = $17,500 in standard late-filing penalties — but the gross negligence risk is larger if CRA determines the non-filing was deliberate. The recommended path: (1) Confirm CRA has not yet contacted you about your foreign property — check your CRA My Account for any correspondence, and check your mail. (2) Engage a tax lawyer or CPA with VDP experience before doing anything else. (3) Determine whether you had unreported rental income from the condo in any of those years — if so, the VDP needs to address both the T1135 late filings and the unreported income. (4) Apply under VDP Track 1 for penalty waiver across all affected years. The cost of professional help and back interest (if any income was unreported) will likely be far less than the accrued penalties under the standard late-filing schedule, especially with VDP relief. Don't wait — VDP eligibility ends the moment CRA contacts you about this issue.

Can I just file the late T1135s without going through the VDP?

Yes — filing late T1135s without a formal VDP application is always an option and is sometimes the right approach. If you have only 1–2 years of late filings, the maximum basic penalty is $2,500–$5,000, and the professional cost of a VDP application might approach or exceed the penalty amount. In those cases, simply filing the late T1135s, paying the standard penalties, and potentially submitting a fairness request (RC4288) for penalty waiver based on reasonable circumstances may be more cost-effective. However, if you have 3+ years of late filings, significant unreported rental income, or any risk of CRA interpreting the non-filing as gross negligence rather than simple oversight, the VDP provides meaningful protection that justifies the professional cost. The key factor: if you had unreported foreign rental income alongside the T1135 non-filings, you need the VDP to address both simultaneously. Filing late T1135s without disclosing the accompanying unreported income creates a disclosure asymmetry that CRA may use to open a broader audit.

What is the 10-year extended reassessment period for T1135 and how does it differ from normal?

For most T1 income tax issues, CRA can reassess within 3 years of the date of the initial Notice of Assessment (the 'normal reassessment period'). For serious non-compliance or misrepresentation, the normal period can be extended, but there is generally a 4-year absolute limit for most individuals. T1135 operates differently: CRA has explicitly extended the reassessment period for foreign income verification failures to 10 years from the date the return was filed (or, if not filed at all, 10 years from when it was due). This means if you didn't file a T1135 for 2016 (due April 30, 2017), CRA can still reassess you for that year until April 30, 2027. This 10-year window is the statutory backstop that makes historical T1135 non-compliance significantly more dangerous than most other tax compliance gaps. It is also the reason that VDP applications for T1135 need to go back the full 10 years — selectively disclosing recent years while hoping CRA doesn't look further back is not a viable strategy. A complete VDP disclosure covering all affected years within the lookback window is the only way to genuinely regularize the situation.

Does the T1135 obligation apply to property I hold through a corporation or trust?

Corporations and trusts have their own T1135 obligations separate from individual shareholders or beneficiaries. A Canadian corporation that owns specified foreign property with aggregate cost over $100,000 CAD must file a T1135 for that corporation's tax year — the individual shareholder does not report the corporate foreign property on their personal T1135. However, if you personally hold foreign property through a foreign corporation or trust (rather than through a Canadian entity), the analysis becomes more complex — interests in foreign entities can themselves be SFP. Additionally, Canadians with significant interests in foreign corporations may have T1134 obligations (interests in foreign affiliates) separate from T1135. If your foreign property ownership structure involves any corporate or trust layer — whether Canadian or foreign — get professional advice before filing, as the reporting obligations are multi-layered and errors on corporate filings carry their own penalty schedule.

Reviewed on March 2026 by the Compass Abroad editorial team

T1135 Late Filing: How to Request Relief and Use the CRA Voluntary Disclosure Program

CRA does not grant standard extensions for T1135 — it's due by your T1 deadline (April 30 for most Canadians). Late filing triggers $25/day up to $2,500/year in standard penalties, or 5% of the property's cost under gross negligence rules. The Voluntary Disclosure Program (VDP) using Form RC199 can waive penalties for late filers — but only if you apply before CRA contacts you.

This guide explains exactly what happens when you miss a T1135, the VDP Track 1 vs Track 2 distinction, the 10-year CRA lookback period, and the step-by-step process for regularizing years of unfiled T1135s. If you've owned foreign property and never filed a T1135, this guide tells you what to do — and what not to do.

Key Takeaways

CRA does not grant formal extensions for T1135 filing the way it does for some income tax situations. The T1135 is due by the same date as your T1 return — April 30 for most individuals (June 15 if self-employed). Filing late automatically triggers the penalty schedule.
The standard late-filing penalty for T1135 is $25 per day, up to a maximum of $2,500 per year per late T1135. If you have 3 years of unfiled T1135s, the maximum basic penalty exposure is $7,500.
If CRA determines the failure to file was made knowingly or in circumstances amounting to gross negligence, the penalty escalates dramatically: 5% of the cost of the specified foreign property that should have been reported, plus $100 per month for each month the return was late (up to 24 months). On a $500,000 property, gross negligence penalties could reach $25,000+.
CRA has a 10-year lookback for T1135 reassessments — significantly longer than the standard 3-year normal reassessment period for most T1 issues. If you've owned foreign property for 10+ years without filing, you have potential exposure for every year.
The Voluntary Disclosure Program (VDP) is CRA's mechanism for taxpayers to come forward before CRA contacts them. A successful VDP application for T1135 can result in penalty waiver and interest reduction — but you must apply before CRA has started any audit, investigation, or contact about the specific issue.
VDP applications use Form RC199. There are two tracks: Track 1 (general program) for most VDP applicants, and Track 2 (limited program) for applications involving intentional non-compliance or large dollar amounts (over $250,000 in omitted income). Track 2 provides penalty relief but not interest relief.
Professional representation (a tax lawyer or CPA with VDP experience) is strongly recommended for T1135 VDP applications. Errors in the application itself can disqualify you from the program, and the presentation of disclosures must be carefully structured.
If CRA has already sent a letter, audit notification, or request for information related to foreign property before you apply for VDP, you are no longer eligible for the program — the window has closed. Simply filing late (without VDP) is then your only option.

Key Facts: T1135 Penalties, Extensions, and VDP

T1135 filing deadline: Same as T1 return — April 30 for most individuals; June 15 for self-employed(Income Tax Act s.233.3(3))
Standard late T1135 penalty: $25/day, maximum $2,500 per year per late T1135(Income Tax Act s.162(7))
Gross negligence penalty for T1135: 5% of cost of unreported property + $100/month up to 24 months(Income Tax Act s.163(2.4))
CRA reassessment period — T1135: 10 years from the date of original filing (or when the return was due if not filed)(Income Tax Act s.233.3; extended reassessment rules)
VDP application form: RC199 — Voluntary Disclosures Program Application(CRA Information Circular IC00-1R6)
VDP Track 1 (general) — benefit: Penalty waiver + interest reduction to 50% of applicable interest(CRA VDP guidelines IC00-1R6)
VDP Track 2 (limited) — benefit: Penalty waiver only — no interest relief; applies to intentional non-compliance(CRA VDP guidelines IC00-1R6)
VDP eligibility cut-off: Application must be made before CRA contacts the taxpayer about the specific issue(CRA IC00-1R6; VDP eligibility conditions)

What the T1135 Actually Is and Who Must File It

The Foreign Income Verification Statement (T1135) is a CRA information return that requires Canadian residents to disclose specified foreign property (SFP) with a total cost exceeding $100,000 CAD at any point in the year. It is not a tax payment form — filing a T1135 does not itself create any tax liability. It is a disclosure form that tells CRA: here are the foreign assets I hold, where they are, and how much income they generated.

For Canadian buyers of foreign property, the T1135 is typically triggered by: (1) direct ownership of real estate outside Canada with an acquisition cost over $100,000 CAD; (2) funds held in foreign bank accounts over the threshold; (3) shares of foreign companies held in non-registered accounts; or (4) any combination of these that in aggregate exceeds $100,000 CAD in cost. The threshold is based on cost — the original acquisition price plus directly attributable costs — not on current market value. A foreign property acquired for $110,000 CAD that has declined in value to $80,000 still requires T1135 filing, because the cost exceeded the threshold.

Many Canadians are unaware of the T1135 obligation when they purchase foreign real estate. Real estate agents and notarios in the destination country have no obligation to advise on Canadian tax reporting requirements. Some Canadian tax preparers who don't specialize in international tax are unfamiliar with the obligation. The result is a large number of Canadians who have owned foreign property for years — sometimes decades — without ever filing a T1135. CRA has been increasing its focus on foreign property non-compliance, with data-sharing agreements with multiple countries providing information about Canadian-owned foreign assets. The risk of detection is higher than it has ever been. See our guide on Canadian tax obligations for foreign property for the complete compliance picture.

The Penalty Structure: From $25/Day to Five Figures

The T1135 penalty structure is tiered based on the nature of the non-compliance. Understanding the distinction between standard late-filing penalties and gross negligence penalties is critical to assessing your risk exposure.

Standard late-filing penalty (s.162(7)): $25 per day from the due date, up to a maximum of $2,500 per late year. For a T1135 due April 30, 2024 that was never filed, the standard penalty accrues at $25/day until it hits $2,500 — reached after 100 days, or approximately early August 2024. For tax years that are more than 100 days late, the standard penalty is a flat $2,500. For 5 years of late T1135s, the maximum standard penalty is 5 × $2,500 = $12,500. This is significant but manageable for most property owners.

Gross negligence penalty (s.163(2.4)): If CRA determines the failure to file was made "knowingly, or under circumstances amounting to gross negligence," the penalty is the greater of $24,000 or 5% of the cost of the specified foreign property that should have been reported. On a $400,000 foreign property, gross negligence penalties are 5% × $400,000 = $20,000 per year. For 5 years, that's $100,000 in penalties. Plus interest on the penalties from the filing dates. The gross negligence standard is not as hard to trigger as "deliberate fraud" — it can apply when CRA concludes the taxpayer was willfully blind to an obvious compliance obligation that a reasonable person would have investigated.

The VDP's core value is converting potential gross negligence exposure into waived penalties. Even if CRA would have assessed only the standard $2,500/year, the VDP eliminates those penalties entirely for Track 1 applicants — making it mathematically superior to simply filing late in almost all cases where professional fees are reasonable relative to the penalty amounts at stake.

VDP Track 1 vs Track 2: Which Applies to Your Situation?

CRA Voluntary Disclosure Program — Track 1 vs Track 2 comparison for T1135 late filers
Feature	Track 1 — General Program	Track 2 — Limited Program
Who qualifies	Most T1135 late filers — no CRA contact, no pattern of intentional non-compliance	Intentional non-compliance; large dollar amounts; sophisticated non-compliance arrangements
Penalty relief	Full penalty waiver for years covered by the application	Full penalty waiver — same as Track 1
Interest relief	50% reduction of applicable interest charges	No interest relief — full interest applies
Prosecution protection	CRA will not refer for criminal prosecution for disclosures made in application	No prosecution protection — but CRA still considers all circumstances
Typical T1135 late filer	Most cases — property owner who didn't know about T1135 obligation	Cases where the taxpayer took active steps to hide foreign property
Application complexity	Moderate — professional representation recommended	High — tax lawyer essential; criminal referral risk is present

The vast majority of T1135 late filers fall into Track 1. Track 2 is reserved for situations where CRA views the non-compliance as intentional — including cases where the taxpayer used offshore structures, transferred assets to obscure ownership, or had previously been contacted by CRA about the issue and didn't comply. If you simply forgot about the T1135, weren't aware of it, or relied on a tax preparer who didn't ask about foreign property, you almost certainly qualify for Track 1. However, the categorization is made by CRA after reviewing the application — and there is no guarantee your application will be accepted into Track 1 rather than Track 2 or rejected entirely. This is why professional representation matters: an experienced VDP practitioner knows how to present disclosures in a way that maximizes Track 1 qualification.

Step-by-Step: Applying for T1135 Late Filing Relief Through the VDP

Determine How Many Years Are Affected

Identify every tax year where your specified foreign property cost exceeded $100,000 CAD and you did not file a T1135. This includes the year of purchase and every subsequent year you held the property. The threshold is based on cost at any point in the year — if you bought property for $150,000 CAD in August 2021, the T1135 was required for 2021 even if you only held it for part of that year. CRA's 10-year lookback means you need to disclose every unfiled year within the lookback window — not just the most recent few.

Gather Foreign Property Documentation

You need to document the cost and nature of each specified foreign property for every year being disclosed: (1) Purchase agreement and closing statement showing acquisition cost in foreign currency and exchange rate used; (2) Name of the foreign financial institution if the property generates income; (3) Country where the property is located; (4) Gross income earned from the property (if any) in each year; (5) Maximum cost at any point in the year for each asset reported. For real estate, the cost is the acquisition price plus directly attributable costs (closing fees, legal fees, notaría fees) converted to CAD at the exchange rate on the closing date.

Determine Whether the Disclosure Is Voluntary (Pre-CRA Contact)

Confirm that CRA has not already contacted you about your foreign property. Check for any CRA letters, audit notifications, compliance requests, or requests for information related to your foreign assets. If CRA has already been in touch specifically about the foreign property issue, the VDP window is closed — you can still file late T1135s but cannot access the penalty relief through VDP. If you have not been contacted, you are eligible to apply. This determination is critical — do not assume you haven't been contacted because you didn't open mail from CRA.

Retain a Tax Professional with VDP Experience

A VDP application for T1135 non-compliance should be handled by a Canadian tax lawyer or CPA with specific VDP experience. The application must be correctly structured — the disclosure must be complete (all years, all foreign assets), voluntary (no partial disclosures that prompt CRA to dig further), and accurate. An incomplete disclosure can be rejected, leaving you with the original penalties plus the exposure of having identified the issue to CRA without benefit. The cost of professional representation ($2,000–$10,000 depending on complexity) is typically well below the penalties at stake.

Prepare and File Form RC199 with Supporting Disclosures

Form RC199 is the VDP application form. It requires: your identifying information, the type of disclosure (T1135 late filing), the tax years covered, a complete and accurate description of the foreign property and income involved, and the taxes/penalties that would otherwise apply. The supporting package should include the reconstructed T1135s for each year being disclosed. File by mail or through your representative — RC199 is not available online through My Account at time of writing. CRA typically acknowledges receipt within 30 days and assigns a file number.

Respond to CRA Correspondence and Pay the Agreed Amount

After reviewing your application, CRA will issue a letter confirming acceptance and specifying what taxes and interest you owe. For Track 1 applicants, this is the underlying tax on any unreported foreign income plus 50% of applicable interest charges. For T1135 late filing alone (no unreported income), the underlying tax owed is zero — the penalties are the primary exposure, and those are waived. You then pay the agreed amount. The VDP process typically takes 3–12 months from application to resolution, depending on CRA's current workload and the complexity of your disclosure.

Worried About an Unfiled T1135?

The window to regularize foreign property disclosure without full penalties is open — but only until CRA contacts you. We can connect you with a Canadian tax professional who handles cross-border real estate compliance and VDP applications.

Frequently Asked Questions: T1135 Extensions, VDP, and Late Filing

Foreign Property Owner Starting Fresh?

Whether you're getting compliant on past years or planning a new foreign property purchase, Compass Abroad connects you with specialists who understand the full Canadian tax picture from T1135 to capital gains to rental income reporting.