Budget 2026 Proposes a Higher T1135 Threshold: What B.C. Taxpayers Should Know
Information checked as of November 10, 2026
Federal Budget 2026 proposes reducing the paperwork associated with foreign property reporting. The proposed changes could affect Canadian residents with overseas bank accounts, investment portfolios, or rental properties. Before changing your filing plans, separate the proposed future thresholds from the rules that apply to your 2026 tax year. [1]
What is proposed?
The budget proposes increasing the T1135 filing threshold from C$100,000 to C$200,000. It also says the Canada Revenue Agency would expand simplified reporting by increasing its upper threshold from less than C$250,000 to less than C$500,000. These thresholds concern the total cost amount of specified foreign property. [1]
The budget describes these measures as proposals. Their final implementation should be confirmed through legislation and updated CRA guidance before you rely on them.
Your 2026 return still needs attention
The proposed changes would apply to taxation years or fiscal periods ending after 2026. For an individual with a calendar tax year, that means the proposed relief would generally begin with the 2027 tax year. It would not apply to the 2026 tax year simply because that return is filed during 2027. [1] [2]
This distinction matters when gathering documents over the coming months. If you have previously filed T1135, continue collecting your 2026 foreign property records rather than assuming a higher threshold has already removed your obligation.
What are the current reporting rules?
Under current CRA guidance, Canadian resident individuals, corporations, certain trusts, and certain partnerships generally must file T1135 if their specified foreign property has an aggregate cost amount exceeding C$100,000 at any time during the year, subject to applicable exclusions. [3]
For taxpayers required to file:
Part A — simplified reporting is available when the aggregate cost stays below C$250,000 throughout the year.
Part B — detailed reporting applies if the aggregate cost reaches C$250,000 or more at any time. [4]
The filing requirement is assessed across the taxpayer’s qualifying holdings. Reviewing only one account or only the December 31 balance can give an incomplete picture. [3]
Foreign property can include investments held in Canada
Specified foreign property includes shares of non-resident corporations, foreign bank deposits, and certain other foreign assets. Holding foreign shares through a Canadian brokerage does not, by itself, remove them from the reporting rules. [3] [5]
There are exclusions. For example, property held in an RRSP or TFSA is excluded from T1135 reporting. Personal-use property and property held exclusively for an active business also have relevant exclusions. Classification should be checked before adding every foreign asset to your total. [3] [5]
Use cost amount, not today’s market value
The threshold generally uses tax cost, commonly the adjusted cost base, rather than current market value. Mortgage debt does not reduce the property’s cost amount to the owner’s equity for this purpose. [5]
For example, if you acquire a foreign rental property in 2026 for C$300,000 using a C$240,000 mortgage, your C$60,000 down payment is not the amount used to test the T1135 threshold. The property’s tax cost must be considered, subject to the applicable rules and exclusions.
Less paperwork would not make foreign income tax-free
The T1135 threshold concerns an information return. Canadian residents generally must report their income from foreign property even when its cost is below the T1135 filing threshold. A higher reporting threshold would not, on its own, exempt foreign interest, dividends, or rental income from Canadian income tax reporting. [5]
Keep the income records even if your circumstances eventually qualify for the proposed filing relief.
What to prepare now
A useful year-end review starts with a complete list of your foreign holdings. Gather account statements, purchase records, ownership details, income summaries, and information about disposals.
Then discuss three questions with your accountant:
Which holdings are specified foreign property, and which qualify for an exclusion?
Did the aggregate cost cross a reporting threshold during 2026?
Could the proposed changes affect your reporting for a later tax year?
Keep 2026 compliance separate from planning for a possible change in 2027. If a prior filing may have been missed, raise it during the review rather than assuming the proposal addresses earlier years.
KKL CPA can help review your foreign property reporting and prepare for tax changes. Contact our Burnaby or Delta office to discuss your circumstances.
This article provides general information based on official sources available on November 10, 2026. Tax treatment depends on your circumstances, and proposed measures may change.
Official sources
Department of Finance Canada — Budget 2026, Tax Measures: Supplementary Information. See “Foreign Income Verification Statement — Form T1135.”
Department of Finance Canada — Budget 2026, Chapter 6. See “Making it easier for Canadians to manage their taxes.”
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