CRA Penalizes New Immigrants for Late Foreign Property Reporting — Critical T1135 Compliance Tips

Summary

The Canada Revenue Agency has recently penalized several new immigrants for failing to file Form T1135 (Foreign Income Verification Statement) on time (Financial Post — "CRA penalizes new immigrants who were late reporting foreign property" — https://financialpost.com/personal-finance/taxes/cra-penalizes-immigrants-late-reporting-foreign-property). Late-filing penalties run at $25 per day, up to a maximum of $2,500, plus arrears interest. These cases highlight a compliance trap that many newcomers—especially those moving from the United States—fall into when they are unaware of Canada's foreign asset reporting rules.

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Our Take

For newcomers arriving from the United States, T1135 compliance is one of the most common—and costly—pitfalls. Many fail to realize that US assets such as bank accounts, brokerage accounts, retirement plans, and real estate held before immigrating to Canada may be reportable on T1135 once they become Canadian tax residents. The penalty is mechanical and the CRA rarely waives it. New immigrants should file T1135 in their first tax return year as a Canadian resident and consider whether the CRA's voluntary disclosures program could apply if deadlines have already passed. Anyone relocating from the US to Canada should consult a cross-border CPA well before their first Canadian filing deadline.

Disclaimer: This article is general information only and does not constitute tax advice; it should not substitute professional tax counsel. Please consult a licensed CPA for advice specific to your situation.