As you start to organize your tax slips, receipts and other tax information to begin preparing your 2025 personal

tax return

, you’ll want to ensure you have all the details of any foreign property you held last year.

The prompt to report ownership of foreign property appears right on page two of the 2025 personal income tax return, under the heading “Foreign property.” The form asks: Did you own or hold specified foreign property where the total cost amount of all such property, at any time in 2025, was more than $100,000? Yes or No. If the answer is yes, the return asks you to complete Form T1135, Foreign Income Verification Statement.

If you are required to file a T1135, it’s important that you file on time or risk a late-filing penalty of $25 per day to a maximum of $2,500, plus arrears interest. If, however, you fail to file the T1135 “knowingly or under circumstances amounting to gross negligence,” the penalty jumps to $500 per month for each month that the return is late, to a maximum of $12,000. After 24 months, the penalty becomes five per cent of the cost of the foreign property, less any penalties already assessed.

So, what exactly is specified foreign property? A Swiss bank account? Check. Your Cayman investment account? Sure. But what about shares of widely-held U.S. corporations such as

Apple Inc.

or Nvidia Corp. if held in a non-registered account? If the total cost is more than $100,000, they must be disclosed on the T1135. Personal use property, like a Florida vacation home, is excluded, as are any assets held in registered accounts such as

registered retirement savings plans

(RRSPs),

registered retirement income funds

(RRIFs) and tax-free savings accounts (TFSAs).

The most recent T1135 case involved a British Columbia taxpayer who was hit with penalties and interest for each of the 2021 and 2022 taxation years for failing to file timely T1135 forms. The taxpayer was charged with $4,500 in penalties and arrears interest for filing the forms late. He had filed the forms for the years in question in July 2023, which was past the deadlines.

The taxpayer first attempted to seek relief directly from the Canada Revenue Agency on the basis that he attempted to file the required form in each year, but had “technical difficulties.” He also argued that the penalties caused him “financial hardship” given his personal circumstances.

His first request for relief was denied by the CRA, so he challenged that decision, asking for a second-level review. That officer also refused his request. The taxpayer then turned to court, which heard the case in a Vancouver courtroom in September 2025.

In these types of court challenges, the federal court judge’s role is to determine whether the second CRA official’s decision to deny relief was “reasonable.” In 2019, a seminal

Supreme Court of Canada

decision described a reasonable decision as “one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker.”

The judge carefully considered the taxpayer’s arguments, but felt that the CRA officer did, indeed, consider the issues raised by the taxpayer before making their decision. First, on the issue of the technical difficulties the taxpayer faced, the CRA officer considered that the taxpayer had used the same tax software for which he claimed technical difficulties to successfully file his income taxes for the two taxation years at issue. The CRA officer also noted the taxpayer’s failure to act quickly to remedy the late filing, despite being warned that late penalties would be ordered if the T1135 forms were not filed.

With respect to the taxpayer’s second argument of financial hardship, the CRA officer commented that the Agency sees “financial hardship as the prolonged inability to afford basic necessities such as food, clothing and shelter and reasonable non-essentials.” The officer considered the taxpayer’s submissions and evidence about his debt and recent financial losses, but did not find this to be a sufficient basis to find financial hardship. Specifically, the CRA officer noted that in the relevant years, the taxpayer continued to make RRSP and TFSA contributions, had significant assets and income, and in the 2023 year, even obtained a tax refund which was larger than the penalties and interest that were ultimately owing.

The judge concluded that the CRA officer had clearly explained their reasons for not being persuaded by the taxpayer’s arguments. As the judge wrote, “A decision can only be set aside where the reviewing court is ‘satisfied that there are sufficiently serious shortcomings in the decision such that it cannot be said to exhibit the requisite degree of justification, intelligibility and transparency.’”

  • Taxpayer got no relief from court after CRA penalties
  • What you need to know about filing to the CRA this year

Finding no such shortcomings with the CRA officer’s decision, the judge dismissed the taxpayer’s application for judicial review, effectively upholding the late-filing penalties and arrears interest. While the government, as the winning party, sought an award of costs against the taxpayer, the judge was sympathetic, and exercised her discretion not to order costs against him given his personal circumstances and his presumably professional conduct throughout the trial.

Jamie Golombek,
FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto.
Jamie.Golombek@cibc.com

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CRUSH YOUR TAXES: A live Q&A with Jamie Golombek

Tax season is in full swing and we know you have questions. That’s why we’re giving Financial Post readers a chance to ask them to our expert tax columnist, CIBC’s Jamie Golombek, who will answer as many as he can live on Mar. 5 at noon ET.
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