If your cryptocurrency holdings exceed $100,000 CAD in cost, you may need to file Form T1135. Failure to file this foreign property reporting form can trigger CRA penalties up to $24,000—yet many Canadian crypto investors don’t even know it exists. Here’s everything you need to know about Form T1135, when cryptocurrency requires reporting, and how to stay compliant.

What Is Form T1135?

Form T1135, officially called the Foreign Income Verification Statement, is a CRA reporting requirement for Canadian residents who own specified foreign property (SFP) with a total cost exceeding $100,000 at any time during the tax year.

Critical clarification: Form T1135 is an information return, not a tax form. Filing it doesn’t create any tax liability—you already report crypto gains and income on your regular tax return. Form T1135 simply informs the CRA about your foreign holdings so they can verify you’re reporting all foreign income correctly.

The Purpose Behind T1135

Before these foreign reporting rules existed, the CRA had limited ability to identify Canadians with offshore assets who might be underreporting income or evading taxes. Form T1135 gives the CRA visibility into foreign holdings, allowing them to cross-reference your reported income against your known foreign assets.

For cryptocurrency investors, this means the CRA can now identify when Canadians hold significant digital assets and ensure all crypto transactions are being properly reported and taxed.

Does Cryptocurrency Qualify as Specified Foreign Property?

Yes—in most cases, cryptocurrency qualifies as specified foreign property that must be reported on Form T1135.

The CRA confirmed in Technical Interpretation 2014-0561061E5 that cryptocurrency constitutes “funds or intangible property,” which falls under the definition of specified foreign property. Because cryptocurrency exists on decentralized digital platforms rather than being situated in any specific country—and certainly not exclusively in Canada—it’s considered property “situated, deposited or held outside Canada.”

When Crypto Is Specified Foreign Property

Your Bitcoin, Ethereum, Solana, and other cryptocurrency holdings are likely specified foreign property if:

They’re held on foreign exchanges (Coinbase, Kraken, Binance, etc.)
They’re stored in personal wallets (hardware wallets, software wallets)
They’re held on non-compliant platforms
They’re NFTs or other blockchain-based digital assets

When Crypto Might NOT Be Foreign Property

The CRA has indicated that cryptocurrency held through Canadian-compliant crypto trading platforms (CTPs) that are Canadian residents may not be considered foreign property. However, this guidance remains somewhat ambiguous.

According to the CRA: “Where CTPs are resident in Canada and comply with Canadian regulations, cryptocurrency held through such CTPs for the benefit of Canadian clients will typically not be considered as ‘situated, deposited or held’ outside Canada.”

Important nuance: This exemption applies only to cryptocurrency held on Canadian Securities Administrators (CSA)-compliant platforms operated by Canadian residents. Most major global exchanges don’t meet this criteria.

The $100,000 Threshold: Cost vs. Value

Form T1135 filing is triggered when the total cost of your specified foreign property exceeds $100,000 CAD at any time during the year.

Critical Points About the Threshold

Based on cost, not current value: The threshold uses your adjusted cost base (what you paid), not the fair market value. If you bought cryptocurrency for $105,000 that’s now worth $50,000, you still must file T1135.

“At any time during the year”: If your holdings exceeded $100,000 even briefly—say, in January before selling in February—you must file T1135 for that entire year, reporting all specified foreign property you held during the year.

All foreign property counts: The $100,000 includes ALL specified foreign property—crypto plus foreign stocks, bonds, real estate, etc. They’re aggregated together to determine if you meet the threshold.

Calculating Your Cryptocurrency Cost

Use the average cost basis method to calculate your cryptocurrency’s cost for T1135 purposes:

Example: You bought cryptocurrency in three transactions:

January: 2 BTC at $40,000 each = $80,000
March: 1 BTC at $50,000 = $50,000
May: 1 BTC at $46,000 = $46,000

Total cost: $176,000 for 4 BTC
Average cost per BTC: $44,000

If you still hold all 4 Bitcoin, your total cost for T1135 purposes is $176,000—well over the $100,000 threshold.

Where Your Crypto Is Held Matters

Determining whether cryptocurrency is foreign property depends partly on where and how you hold it.

Cryptocurrency on Foreign Exchanges

Platforms like: Coinbase, Kraken, Binance, Gemini, Bitfinex

T1135 status: Almost certainly specified foreign property requiring reporting. These are foreign companies holding your cryptocurrency as custodian.

The CRA applies the same logic used for traditional investments: shares of a Canadian company held by a non-resident agent for a Canadian beneficial owner are considered foreign property. Your cryptocurrency held by foreign exchanges follows this principle.

Cryptocurrency on Canadian Exchanges

Platforms like: Bitbuy, NDAX, Coinsquare, Newton (if CSA-compliant)

T1135 status: Potentially exempt from reporting if the platform is:

A Canadian resident company
Fully compliant with Canadian Securities Administrators regulations
Operating as a registered crypto trading platform

Caution: The CRA’s guidance here is ambiguous. Conservative tax planning suggests reporting even Canadian exchange holdings unless you have clear documentation that the platform meets all criteria for the exemption.

Cryptocurrency in Personal Wallets

Hardware wallets: Ledger, Trezor, and similar cold storage devices

Software wallets: MetaMask, Trust Wallet, mobile wallets

T1135 status: Generally considered foreign property. Because cryptocurrency on personal wallets isn’t held through any Canadian intermediary, it’s “situated, deposited or held outside Canada” by default.

Where you physically store your hardware wallet (in Canada) doesn’t change the classification—the cryptocurrency itself exists on blockchain networks that aren’t Canadian property.

DeFi Protocols and Staking

Cryptocurrency deposited in decentralized finance (DeFi) protocols, staking platforms, or liquidity pools is typically foreign property. These are non-Canadian platforms holding your assets, even if accessible from Canada.

The Business Exemption: When You DON’T File T1135

Specified foreign property excludes “property that is used or held exclusively in the course of carrying on an active business.”

If your cryptocurrency activity constitutes an active trading business and your cryptocurrency is business inventory, you may be exempt from T1135 filing requirements.

Requirements for the Business Exemption

To qualify for this exemption:

You must be carrying on an active business (not just investing)
The cryptocurrency must be inventory held for resale
The cryptocurrency must be used exclusively in the business

Example of exemption: You operate a cryptocurrency trading business, actively buying and selling crypto throughout each day. Your trading inventory (cryptocurrency held for short-term resale) would be exempt from T1135 reporting.

Example of NO exemption: You occasionally flip some altcoins for profit. While this might generate business income for tax purposes, it’s unlikely to constitute “carrying on an active business” for T1135 exemption purposes.

The Trade-Off: Higher Taxes vs. No T1135

The business exemption comes with a significant tax cost: business income is 100% taxable while capital gains are only 50% taxable. Many crypto holders would pay substantially more tax treating holdings as business inventory rather than capital property.

This creates a challenging decision: accept T1135 filing requirements and capital gains treatment, or claim the business exemption but pay tax on 100% of profits. Professional guidance from crypto consultants helps optimize this decision based on your specific situation.

How to File Form T1135

Form T1135 has two reporting methods depending on your foreign property holdings:

Part A: Simplified Reporting (Under $250,000)

If the total cost of your specified foreign property stayed under $250,000 throughout the entire year, you can use simplified Part A reporting:

Check boxes indicating types of property held (funds, shares, real estate, etc.)
List countries where property is located
Report total income earned from all foreign property
No need to provide details on individual holdings

For cryptocurrency: Check the box for “funds or intangible property” and list countries where exchanges are located (or “various” for personal wallets).

Part B: Detailed Reporting ($250,000+)

If your foreign property exceeded $250,000 at any time during the year, you must use detailed Part B reporting:

Name of foreign institution or entity
Country code
Specific income from each property
Cost amount of each property
Maximum cost during the year

For cryptocurrency: This means listing each exchange separately, specifying cryptocurrency holdings on each platform, and detailing income generated (staking rewards, interest, etc.).

Filing Deadline

Form T1135 is due the same day as your income tax return:

Individuals: April 30, 2026 (for 2025 tax year)
Self-employed individuals: June 15, 2026 (but any tax owing is due April 30)
Corporations: Six months after fiscal year-end

You file T1135 electronically through NETFILE along with your tax return, or mail it separately if filing by paper.

Penalties for Non-Compliance

The CRA enforces Form T1135 requirements aggressively, with substantial penalties for late filing or false information.

Late Filing Penalties (Tier 1)

If you file Form T1135 late:

Minimum penalty: $100
Standard penalty: $25 per day late
Maximum penalty: $2,500

Example: If you’re 100 days late, you’d pay $2,500 (the maximum).

Demand to File Penalties (Tier 2)

If the CRA sends you a formal demand to file T1135 and you fail to file knowingly or due to gross negligence:

Penalty: $1,000 per month late
Maximum penalty: $24,000

Example: If you ignore a CRA demand for 12 months, you’d owe $12,000 in penalties.

False Statement or Omission Penalties

If your T1135 contains false information or omits required details:

Penalty: The greater of $24,000 or 5% of the unreported foreign property’s cost

Example: You fail to report cryptocurrency worth $400,000. The penalty would be $24,000 (since 5% of $400,000 equals $20,000, which is less than the $24,000 minimum).

Additional Penalties for Extreme Late Filing

For returns more than 24 months late, the CRA can impose additional penalties beyond the standard maximums.

Common T1135 Crypto Scenarios

Scenario 1: Coinbase Holdings Over Threshold

Situation: David holds Bitcoin and Ethereum on Coinbase (U.S. exchange) with a total cost of $135,000.

T1135 requirement: Yes, must file. Coinbase is a foreign exchange, and holdings exceed $100,000.

How to report: If total foreign property is under $250,000, use Part A simplified reporting. Check “funds or intangible property,” list country as “USA,” and report any income earned (staking, interest).

Scenario 2: Multiple Exchanges, Mixed Holdings

Situation: Sarah holds:

$60,000 cost in crypto on Kraken (foreign)
$45,000 cost in U.S. stocks at TD
$30,000 cost in crypto on Bitbuy (Canadian CTP)

T1135 requirement: Yes. Kraken crypto ($60,000) + U.S. stocks ($45,000) = $105,000 in specified foreign property, exceeding threshold.

Important note: The Bitbuy holdings potentially don’t count toward the threshold if Bitbuy meets the Canadian CTP exemption criteria. However, conservative reporting would include all holdings.

Scenario 3: Personal Wallet Storage

Situation: Michael holds $120,000 cost of cryptocurrency on a Ledger hardware wallet stored in his Toronto home.

T1135 requirement: Yes, must file. Personal wallet cryptocurrency is foreign property regardless of where the physical device is located.

How to report: List as “funds or intangible property,” specify “various” or “multiple” for country (since blockchain networks aren’t country-specific), and report any income generated.

Scenario 4: Sold Before Year-End

Situation: Jennifer bought XRP for $115,000 in January 2025 on Binance. She sold it all in March 2025, ending the year with no crypto holdings.

T1135 requirement: Yes, must still file for 2025. Because her foreign property exceeded $100,000 “at any time during the year,” she must report all specified foreign property held during 2025, even though she sold before year-end.

Scenario 5: Day Trader Business Inventory

Situation: Alex operates a full-time cryptocurrency trading business, executing hundreds of trades monthly. His crypto inventory fluctuates but averages $200,000 cost.

T1135 requirement: Potentially exempt if his cryptocurrency qualifies as business inventory used exclusively in an active business. However, this requires clear documentation and meeting strict criteria.

Recommendation: Consult with crypto tax professionals to determine if the business exemption applies and document the position appropriately.

Record-Keeping for T1135 Compliance

Maintaining detailed records is essential for accurate T1135 filing:

Essential Documentation

Transaction history: Complete records of all purchases showing cost in CAD
Exchange statements: Year-end balances from all platforms
Wallet records: Blockchain transaction records for personal wallets
Income records: Documentation of staking rewards, interest, airdrops
Foreign exchange rates: Bank of Canada rates used for CAD conversions
Holding locations: Clear records of which platforms hold which assets

Tracking Throughout the Year

Don’t wait until tax time to determine if you exceeded the threshold:

Track your foreign property cost monthly or quarterly
Note the highest cost point during the year
Maintain separate tracking for potentially exempt Canadian holdings
Document any transfers between platforms

What If You Missed Filing T1135?

The Voluntary Disclosures Program

If you failed to file Form T1135 in previous years, the CRA’s Voluntary Disclosures Program (VDP) offers relief:

Benefits of VDP:

Waiver of gross negligence penalties
Waiver of prosecution
Potential reduction in interest charges
Protection from criminal charges

Critical requirement: Your VDP application must be “voluntary”—meaning you file BEFORE the CRA contacts you about the non-compliance. Once the CRA initiates contact, you cannot use VDP for that issue.

Making a VDP Application

To qualify for VDP relief:

Act quickly: File before the CRA contacts you
Be complete: Disclose all years and all non-compliance
Provide documentation: Include complete records supporting your disclosure
Pay what you owe: Pay any taxes owing (penalties are waived but taxes aren’t)

Professional assistance: VDP applications are complex. Tax professionals experienced with cryptocurrency matters can significantly improve your chances of acceptance.

Practical T1135 Tips for Crypto Investors

Monitor your threshold yearly: Track total foreign property cost throughout the year, not just at year-end.
Document exchange locations: Keep clear records of which exchanges are Canadian CTPs vs. foreign platforms.
Consider consolidation: If you’re close to the threshold, consolidating holdings onto fewer platforms simplifies reporting.
Use crypto tax software: Tools like Koinly or CoinTracker can help calculate cost basis and track holdings across platforms.
File even if uncertain: When in doubt, file T1135. The penalties for not filing when required are severe; there’s no penalty for filing when not strictly required.
Get professional guidance: Crypto consultants and tax professionals can help determine your filing requirements and optimize your approach.
Don’t rely on exchanges: Exchanges won’t tell you if you need to file T1135. This is your responsibility to determine.
Keep lifetime records: The CRA can audit back three years normally, or indefinitely if they suspect misrepresentation.

Get Expert Guidance on T1135 Compliance

Form T1135 requirements for cryptocurrency are complex and consequences for non-compliance are severe. Whether you’re uncertain if your holdings require reporting, need help determining which platforms qualify for exemptions, or want to ensure your filing is accurate and complete, professional guidance provides peace of mind and protection against penalties.

At CryptoExperts, we help Canadian cryptocurrency investors understand their tax obligations, including Form T1135 reporting requirements. Our team provides guidance on structuring your cryptocurrency holdings, maintaining proper records, and staying fully compliant with CRA requirements.

Book a free consultation by visiting CryptoExperts.ca or calling 519-996-7471. We serve clients across Canada including Toronto, Windsor, and London.

Disclaimer: This article provides general information about Form T1135 reporting requirements and should not be considered professional tax or legal advice. T1135 filing requirements are determined on a case-by-case basis with consideration of multiple factors. Penalties for non-compliance can be substantial. Always consult with a qualified tax professional or accountant regarding your specific circumstances. CryptoExperts provides guidance and education on cryptocurrency matters but does not offer tax preparation or legal services.