Reporting Foreign Income as a Canadian Newcomer: What Must You Declare?
Last updated: 2026-03-12 | CRA Reference: T1135 – Foreign Income Verification; T2209 – Federal Foreign Tax Credits; Income Tax Folio S5-F4-C1
When Does the Worldwide Income Rule Apply After You Become a Canadian Resident?
Once you become a Canadian tax resident, you are taxed on your worldwide income — not just income earned in Canada. This includes employment income from a foreign job (even remote work for an employer abroad), rental income from foreign property, dividends from foreign investments, foreign pension income, and capital gains on foreign assets. Income earned before your residency start date is generally excluded, but may still require disclosure.
What Foreign Income Do You Need to Report, and Where Do You Report It?
Income Type | T1 Line | CRA Form | Notes |
Foreign employment income | None | Convert to CAD using Bank of Canada annual avg rate | |
Foreign business income | Net income after foreign expenses | ||
Foreign rental income | Report gross rents and net income | ||
Foreign dividends | None | No dividend tax credit for foreign dividends | |
Foreign pension | None | May be exempt under a tax treaty | |
Capital gains on foreign property | Use CAD values at acquisition and disposition | ||
Foreign bank interest | None | Report gross amount |
The T1135 — Foreign Income Verification Statement
If you held specified foreign property with a total cost exceeding $100,000 CAD at any point during the year, you must file Form T1135 with your return. This includes foreign bank accounts, stocks, bonds, real estate (excluding personal-use property), and foreign investment funds. Failure to file carries penalties of $25/day (minimum $100, maximum $2,500) plus potential gross negligence penalties.
Note: The threshold is based on cost, not current market value — newcomers often overlook this distinction.
Worked Example:
Tariq arrived in Canada on March 1, 2025. He holds:
A savings account abroad: CAD equivalent $45,000
Shares in a foreign company (original cost): CAD equivalent $70,000
Total cost of specified foreign property: $115,000 ⚠️
Tariq must file Form T1135 with his 2025 T1 return.
How Do Tax Treaties Help You Avoid Double Taxation?
Canada has tax treaties with over 90 countries. If you already paid tax on income in your home country, you can claim a Foreign Tax Credit (Form T2209) to offset Canadian tax on the same income. Some pension income (e.g., US Social Security, UK state pension) may be partially or fully exempt under the applicable treaty. Always verify at the Canada-specific treaty page for your home country before assuming income is exempt.
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