Form T1135 for Canada-Resident NRIs: Why Your Indian Shares, Mutual Funds and NRO Balance Quietly Cross the Cost Line

A reader in Brampton sent me his CRA notice with a one-line message: "But there's no income on most of this, why am I being penalised?" He had moved to Canada in 2021, kept an NRO account, a small portfolio of Indian shares from his working years in Mumbai, and one equity mutual fund he had set up before he left. None of it generated much. The shares paid token dividends, the fund was in growth option so it paid nothing, and the NRO balance was just sitting there. He had filed his Canadian returns on time and reported the bit of interest and dividend faithfully. What he had never filed was Form T1135, the Foreign Income Verification Statement, because he assumed a form with "income" in the name was about income. It is not. It is about holding the asset, and the cost of what he held had crossed CAD 100,000 years earlier.

The 30-second answer: A Canadian resident must file Form T1135 if, at any time in the year, the total cost (not market value) of their specified foreign property exceeded CAD 100,000. For an NRI that includes Indian shares, Indian mutual funds, NRE, NRO and FCNR deposits, debt owed by non-residents, and Indian rental property. It is filed even with zero income, because it reports holding the asset, not earning from it. Two tiers apply: a simplified method for cost between CAD 100,000 and CAD 250,000, and a detailed method at CAD 250,000 or more. Your own home in India and anything inside an RRSP are excluded. Penalties start at CAD 25 per day, minimum CAD 100, up to CAD 2,500, and rise sharply for gross negligence. Canada gets your Indian account data through CRS, so non-filing is detectable.

This guide is for the NRI who is now a tax resident of Canada and still has financial roots in India, which is almost everyone in the first decade after moving. If you do not yet know whether you are a Canadian tax resident, or how that interacts with your Indian status, read the residency and RNOR guide first, because T1135 only bites once Canada considers you resident. What follows is the part that surprises diligent people: what counts as specified foreign property, why your bank balances matter as much as your investments, how the CAD 100,000 line is actually measured, which of the two methods you fall into, and the penalty regime that makes a quiet form into an expensive one. I will use a running worked example throughout and an illustrative rate of CAD 1 = Rs 61 where I convert.

The form is about holding, not earning

Start with the misunderstanding that caused my Brampton reader his penalty, because it is the single most common error NRIs make with T1135.

The full name is the Foreign Income Verification Statement, and the word "income" misleads people into thinking it is triggered by earning foreign income. It is not. Form T1135 is triggered by owning specified foreign property whose total cost exceeded CAD 100,000 at any point in the year, regardless of whether that property produced a single dollar of income. A portfolio of Indian shares sitting in a demat account paying nothing, an NRO fixed deposit you forgot about, a growth-option mutual fund that distributes nothing: all of it counts toward the threshold, and once you are over the line you file the form even if your foreign income for the year is zero.

This is worth saying twice because the instinct runs deep. NRIs are used to the idea that you report income when there is income. T1135 inverts that. The Canada Revenue Agency wants visibility on the stock of foreign assets you hold, not just the flow of income they generate, because the assets are where untaxed gains and hidden wealth accumulate. The form is a disclosure of holdings. Treat it as a balance-sheet exercise, not an income statement.

The practical effect: you cannot decide whether you need to file by looking at how much foreign income you earned. You decide by adding up the cost of what you own. Many of the people who get caught are exactly the ones who reported their small foreign income honestly and never realised the holdings themselves needed a separate disclosure.

What counts as specified foreign property

The category is broad, and for an NRI it sweeps in most of what you left behind in India. Specified foreign property includes:

• Indian shares, whether held in a demat account or as physical certificates, in Indian companies.
• Indian mutual funds. For a foreign mutual fund you report the investment in the fund itself, not the underlying stocks and bonds the fund holds. The unit you own is the property; what the fund does internally is not your line item.
• NRE, NRO and FCNR bank deposits. This includes savings balances and fixed deposits. This is the category NRIs forget most often, and the one that most reliably pushes people over the threshold on its own.
• Debt owed to you by non-residents, for example money you have lent to family in India or an Indian company, or bonds and debentures of Indian issuers.
• Indian rental real estate, meaning property in India held to earn income rather than to live in.

A few things deliberately fall outside. Personal-use property is excluded, so the flat or house in India that you actually live in or keep for your own use, rather than to rent out, does not count. Property held inside an RRSP or other registered plan is excluded, because the CRA already has visibility on registered accounts. That exclusion matters for the rare NRI who has somehow placed foreign assets inside a registered plan, but for most people the relevant exclusions are the personal-use home and the registered-plan carve-out.

Note the asymmetry that trips up Indian investors specifically. An interest in a Canadian mutual fund or ETF is not reportable on T1135 even if that fund holds entirely Indian or foreign stocks, because the fund itself is a Canadian property. But your Indian mutual fund, the one you set up with an Indian fund house before or after you left, is foreign property and counts in full. Where the fund is domiciled is what matters, not what it invests in.

The threshold is cost, and it is measured at any time in the year

Two features of the CAD 100,000 line catch people out, and both are in the wording.

First, the test is cost, not market value. You add up what you paid for your specified foreign property, the adjusted cost base in Canadian dollars, not what it is worth today. For shares and mutual funds bought years ago in rupees, that means converting the original purchase cost at the exchange rate when you acquired them, or at the rate when you became a Canadian resident if you owned them before immigrating, since that is generally when their cost is fixed for Canadian purposes. A portfolio that has tripled in value might still sit below CAD 100,000 on a cost basis, and a portfolio that has done nothing might be above it. Use cost.

Second, the test is at any time in the year, not just at year end. If your total cost touched CAD 100,001 in July and you sold down to CAD 80,000 by December, you still have to file for that year. The CRA looks at the high-water mark of cost during the year, not the closing snapshot. People who do a single large remittance or a property purchase mid-year and then reduce their position by 31 December sometimes assume the year-end figure is what counts. It is not.

There is one important relief for newcomers, and I cover it in the edge cases below: an individual generally does not have to file T1135 for the year in which they first became a resident of Canada, under section 233.7 of the Income Tax Act. That is a first-year-only exemption, and it expires the moment the calendar turns.

Worked example: how CAD 140,000 sneaks up on you

Take a concrete Canada-resident NRI, the kind of profile I see most often, and watch the threshold get crossed without any single asset looking large.

She moved to Toronto in 2022. By 2025 she holds three things in India:

• Indian shares, bought over her working years in Bengaluru, with a total cost of CAD 60,000 (about Rs 36,60,000 at Rs 61).
• An NRO fixed deposit holding CAD 50,000 (about Rs 30,50,000), money that accumulated from rent and a maturing insurance policy before she left.
• One Indian equity mutual fund, growth option, with an investment cost of CAD 30,000 (about Rs 18,30,000).

She earns almost nothing on this in the year. The shares pay a small dividend, the NRO deposit pays interest she reports, and the mutual fund in growth option distributes nothing at all. Her instinct, like my Brampton reader's, is that with so little income there is nothing to report beyond the dividend and interest on her T1.

Now add the costs:

Asset	Cost (CAD)	Cost (Rs, at Rs 61)
Indian shares	60,000	36,60,000
NRO fixed deposit	50,000	30,50,000
Indian equity mutual fund	30,000	18,30,000
Total cost	140,000	85,40,000

The total cost is CAD 140,000, comfortably over the CAD 100,000 threshold. She must file Form T1135. Notice what is doing the work here. Her investments alone, shares plus fund, total CAD 90,000, which is under the line. It is the NRO deposit that pushes her over. Had she counted only her "investments" and ignored her bank balance, she would have concluded, wrongly, that she did not need to file. This is the classic miss, and it is why I keep insisting that bank deposits are specified foreign property, not background cash.

Because her total cost is between CAD 100,000 and CAD 250,000, she falls into the simplified method. More on what that means next.

The two methods: simplified and detailed

The form has two tiers, and which one you use depends only on the total cost of your specified foreign property.

The simplified method (Part A) applies when your total cost was more than CAD 100,000 but below CAD 250,000 throughout the year. This is the lighter regime. Instead of itemising every holding, you tick boxes for the categories of property you held during the year (funds held outside Canada, shares of non-resident corporations, indebtedness owed by non-residents, real property outside Canada, and so on), identify the top countries by maximum cost, and report the total income from all of it and any gain or loss on disposition. You do not list each share lot or each deposit individually. The NRI in my worked example, at CAD 140,000, uses this method.

The detailed method (Part B) applies when your total cost reached CAD 250,000 or more at any time in the year. Here you report property by property. For each specified foreign property you give the country, the maximum cost amount during the year, the cost amount at year end, the income earned from it, and any capital gain or loss realised on disposing of it. This is materially more work, and it is where keeping clean records of original cost in Canadian dollars pays off. An NRI with a larger Indian portfolio, several deposits and a rental flat will commonly land here.

The threshold between the two methods is again measured on cost and at any time in the year, exactly like the filing threshold itself. Touch CAD 250,000 of cost in any month and you are in the detailed method for that year, even if you ended below it.

Filing, deadlines and the records you need

Form T1135 is filed with your income tax return and is due on the same date as the return. For most individuals that is 30 April following the tax year; if you or your spouse are self-employed the filing deadline moves to 15 June, though any tax owing is still due 30 April. The form can be filed electronically with most return software, and individuals can also file it on its own through the CRA's systems if it was missed.

The records that make this painless are the ones NRIs rarely keep at the time:

• The original cost of each Indian asset in Indian rupees, with the date of purchase.
• The exchange rate at the relevant date, either the date of purchase or, for assets owned before immigrating, the date you became a Canadian resident, which generally resets your cost base to fair market value on that day.
• Year-end balances on your NRE, NRO and FCNR accounts, and the high-water mark during the year if a large credit came and went.
• Any dispositions, with proceeds and the resulting gain or loss, since the detailed method asks for these directly.

Convert to Canadian dollars using a consistent and defensible rate, typically the Bank of Canada rate at the relevant date for cost figures. The same discipline you apply to your foreign tax credit and capital gains reporting carries straight over to T1135, which is why I treat these as one record-keeping system rather than three.

Edge cases

The general rule is clean, but the corners are where money and anxiety concentrate. Here are the four that matter most for NRIs.

Cost versus market value

I have said it, but it earns its own line because it cuts both ways. The threshold and the simplified-versus-detailed split are both measured on cost, not market value. An NRI whose Indian equity portfolio has doubled may still be below CAD 100,000 on cost and owe no T1135, while another whose assets have barely moved may be above it. Do not let a rising or falling market fool you into the wrong conclusion. The one place market value re-enters is when you became a Canadian resident owning these assets already: at that point your cost base is generally reset to the fair market value on the date you became resident, and it is that reset figure, not your original rupee purchase price, that you carry forward as cost. So an old portfolio bought cheaply in the 2000s may have a much higher Canadian cost base than you expect, because it was marked to value on your arrival.

Registered plans

Property held inside an RRSP, RRIF, TFSA or other registered plan is excluded from T1135 entirely. This rarely helps an NRI directly, because almost nobody manages to get Indian shares or an NRO deposit inside a Canadian registered plan. But it matters for the mirror situation: a Canadian holding foreign stocks inside an RRSP does not report them, while the same stocks held in a non-registered account would be reportable. For the typical NRI, the takeaway is simpler: your Indian assets sit outside any registered plan, so the exclusion does not rescue you, and they count in full.

First year and last year of residency

The first-year exemption is real and generous. An individual does not have to file Form T1135 for the year in which they first became a resident of Canada, under section 233.7. So if you landed in Canada in, say, August 2025 and became resident then, you do not file T1135 for 2025 even if your Indian assets were well over CAD 100,000. You file it for the first time for 2026, your first full year of residency. This is the source of a lot of "first year of Canadian residency confusion": people either file unnecessarily in year one or, worse, assume the year-one exemption rolls forward and skip year two as well. It does not. The exemption is for the year of arrival only.

The last year is the other bookend. When you cease to be a Canadian tax resident, your filing obligation tracks your residency, and your departure triggers a separate and often larger event, the deemed disposition or departure tax, which I treat fully in the Canada departure tax guide. For T1135 purposes, the year you leave is a part-year residency, and the obligation applies to the period you were resident. Coordinate the two: the same assets that sat on your T1135 are the ones that crystallise on departure.

Joint property

Where property is held jointly, each owner counts their own share of the cost toward their own CAD 100,000 threshold. If you and your spouse jointly hold an Indian fixed deposit costing CAD 120,000, each of you is treated as holding CAD 60,000 of cost. On its own that is below the line for each of you. But you each add your CAD 60,000 share to your other specified foreign property, and one spouse may cross the threshold while the other does not, depending on what else each holds individually. Do not assume joint ownership halves the problem away. It splits the cost, but each person still tots up their own half against everything else they own.

Why non-filing is no longer a quiet option

There was a time when an NRI could reasonably assume the CRA had no easy way to see an NRO account in Pune or a demat account in Mumbai. That time is over.

Canada and India both participate in the Common Reporting Standard, the OECD framework under which financial institutions report account information to their local tax authority, which then exchanges it automatically with the account holder's country of tax residence. In plain terms: your Indian bank and your Indian mutual fund house report your account details to Indian authorities, who pass them to the CRA because you are a Canadian tax resident. The CRA increasingly cross-checks this incoming data against filed T1135 forms. An account that shows up in the CRS feed but never on your T1135 is exactly the kind of mismatch that generates a review.

This is why I no longer treat T1135 as a low-risk form to let slide. The detection mechanism is automatic and ongoing, not dependent on a human auditor stumbling onto your file. Combine that with the penalty regime below and the cost-benefit of skipping it has collapsed.

The penalties, and why a no-income form gets expensive

Here is the part that turns a forgotten form into a real number.

The basic penalty for failing to file T1135 on time is CAD 25 per day, with a minimum of CAD 100 and a maximum of CAD 2,500 per year. That maximum is reached after 100 days. Crucially, this penalty applies even if there is no tax owing and the assets earned no income, because the penalty is for failing to disclose holdings, not for unpaid tax. This is precisely what blindsided my Brampton reader. He owed almost no tax, so he could not understand the charge. The charge was never about tax. It was about the missing disclosure.

From there it escalates:

• For a gross negligence failure, the penalty rises to CAD 500 per month, up to a much larger cap, where the CRA concludes you knowingly or in circumstances amounting to gross negligence failed to file.
• Once the CRA issues a formal demand to file and you still do not, the penalty can climb to CAD 1,000 per month.
• Separately, failing to file T1135 extends the reassessment period by an additional three years. The CRA's normal window to reopen an individual return is three years; non-filing of T1135 stretches that to six years, so a missed form keeps old years open to audit far longer than you would expect.

If you have missed filings for prior years, do not simply start filing this year and hope the past is forgotten, and equally do not panic-file in a way that flags the gap badly. The cleaner route is usually the CRA's Voluntary Disclosures Program, which, where you qualify and come forward before the CRA contacts you, can reduce or eliminate penalties on the late filings. That is a decision to take with a Canadian cross-border accountant, not a do-it-yourself gamble, because eligibility for the program turns on coming forward genuinely voluntarily.

The closing read

For most Canada-resident NRIs in their first decade abroad, the honest read is that you are far more likely to be over the T1135 threshold than you assume, because you are counting the wrong things. You look at your investments, see a modest portfolio, and conclude you are clear. Then you forget that your NRE, NRO and FCNR balances are specified foreign property too, and that the test is cost across everything, measured at the highest point in the year, not the year-end snapshot. The worked example is deliberately unspectacular: CAD 60,000 of shares, a CAD 50,000 deposit and a CAD 30,000 fund, none of it dramatic, and yet CAD 140,000 over the line and squarely in filing territory.

So do the boring thing. Once a year, total the cost in Canadian dollars of every Indian asset you hold outside an RRSP and outside your own home: shares, Indian mutual funds, all your Indian bank deposits, any money lent to non-residents, any Indian rental property. If that total has touched CAD 100,000 at any point, you file, even with zero income, and you file every year after your first year of residency until the assets fall away or you leave Canada. Below CAD 250,000 you use the simplified method, which is genuinely light. At or above it you use the detailed method and you will be glad you kept cost records. Given that CRS already hands the CRA your Indian account data, the only real question T1135 leaves open is whether your form matches what Canada already knows. Make sure it does.

Related guides

• The India-Canada tax treaty in depth
• Foreign tax credit and Form 67
• NRI residency and the RNOR rules
• Schedule FA: India's foreign-asset reporting
• Capital gains tax for NRIs on shares and mutual funds
• NRI mutual fund eligibility
• Tax-efficient investing for NRIs
• NRI portfolio asset allocation
• NRE, NRO and FCNR accounts explained
• Canada departure tax and deemed disposition
• Canada's offshore investment fund property rules
• Returning to India: resetting cost basis

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This guide is general information, not tax or financial advice. Form T1135 rules, thresholds and penalties are set by the Canada Revenue Agency and the Income Tax Act and can change; your own obligation depends on your residency status, the cost of your specific assets, and your filing history. Cross-border situations, missed prior-year filings and Voluntary Disclosures Program eligibility in particular should be reviewed with a qualified Canadian cross-border accountant or tax lawyer before you act.