Do US stocks held in a Canadian brokerage account count for T1135?

Why the shares count even in a Canadian account

The T1135 test looks at the residence of the company whose shares you hold, not the location of the brokerage account holding them. A Canadian discount brokerage account holding Apple or Microsoft shares is still holding shares of a non-resident corporation, which is exactly the category of property the T1135 is designed to capture. Moving the account from a US broker to a Canadian one does not change what the underlying investment is, so the reporting obligation follows the shares rather than the institution.

Why the T3 or T5 slip you receive does not exempt you

There is a genuine exemption on the T1135 for property held through a Canadian securities dealer or trust company where the income is reported to you on a T3 or T5 slip, and this trips people up because a Canadian brokerage does issue a T5 for the US dividends your shares pay. The exemption specifically carves out shares of a non-resident corporation from that relief, so it applies to things like foreign-currency term deposits or certain debt instruments held through a Canadian dealer, not to directly held foreign stock. Getting a T5 for the dividend income does not change the fact that the shares themselves still need to be listed on the T1135.

Cost amount, not current value, is the test

The threshold that triggers the filing obligation is based on the total cost amount of all your specified foreign property, generally what you paid in Canadian dollars, not what it is currently worth. If the combined cost of your foreign holdings exceeded $100,000 at any point during the year, the T1135 is required for that year even if the current market value has since dropped well below that line, and even if it never was worth $100,000 at any single valuation date you might otherwise think to check. This trips up investors who assume a market downturn removed the obligation; it did not, because the test looks backward at cost, not forward at value.

What is excluded from the count

Two categories of holdings do not count toward the $100,000 threshold at all.

• Registered accounts. US stocks held inside an RRSP, RRIF, TFSA, RESP or RDSP are excluded from specified foreign property entirely, regardless of the cost or value involved, because the exclusion applies to the registered plan itself rather than to what it holds.
• Canadian-listed funds holding US stocks. If you own units of a Canadian mutual fund trust or a Canadian-listed ETF that itself invests in US equities, you personally own units of a Canadian resident trust, not the underlying US shares, so your holding is not specified foreign property even though the fund's portfolio is full of foreign companies.

The practical result is that two investors with an identical amount of US market exposure can have very different T1135 obligations, depending on whether they hold the US companies directly or through a Canadian-domiciled fund wrapper.

Simplified versus detailed reporting once you are over the threshold

Once your total cost of specified foreign property is over $100,000, the form still offers two levels of detail. A simplified method is available where the total cost stayed under a set upper threshold throughout the year, letting you check boxes by category of property and country rather than listing each holding separately. Above that upper threshold, a detailed method is required, listing each specified foreign property individually along with its income, gain or loss, and highest cost during the year. Knowing which method applies before filing season starts makes the difference between a quick form and a lengthy one.

What changes when the brokerage account is joint

A joint account with a spouse or another family member does not let either holder ignore the shares. Each account holder generally reports their own share of the cost amount, based on how much of the account they actually contributed or are treated as owning, and each holder tests that share against the $100,000 threshold separately. In practice this means a couple who each contributed half of a $180,000 US stock position may each be under the threshold individually and neither files, while a couple where one spouse funded the entire account has that spouse alone facing the filing obligation. Do not assume that splitting an account in two automatically halves the reporting requirement without checking who actually funded it.

Where this fits alongside the rest of your return

The T1135 is filed together with your T1, not instead of reporting the dividend and capital gains income the same US stocks generate. The shares themselves go on the T1135; the dividends, reported to you on a T5 and often with US withholding tax attached, still go on the regular income lines and support a foreign tax credit claim. We walk through that side of the return in how to report foreign income on a Canadian tax return, and the cost of getting the T1135 itself wrong or late in what the penalty is for not filing a T1135.

How we track this for clients with US brokerage holdings

We track the cost amount of directly held foreign shares separately from anything sitting in a registered account or a Canadian-listed fund, so the $100,000 threshold is monitored accurately rather than estimated from a year-end statement. For joint accounts, we confirm the actual funding split before assuming either holder is under the threshold. Where the threshold is crossed, we prepare the T1135 using whichever reporting method fits the total involved, alongside the T1 in the same engagement. This runs through our T1135 foreign income verification guide and our cross-border tax services, with fees quoted after a discovery call once we see your account mix.

Source: CRA — T1135 Foreign Income Verification Statement.