T1135 – Reporting US Accounts

Question

“I’m a US Citizen and new Canadian resident for 2023. I am filing my Canadian taxes, and need to fill out the T1135. I still have my US bank accounts, IRA’s, Roth IRA’s, and a regular US brokerage account. I believe that traditional IRA’s don’t need to be reported, but the Roth IRA and the US brokerage account should be reported? I want to be safe, so what is the right way to fill out this form?”

Answer

You are correct that the traditional IRA does not need to be reported. Here's the general list of non-reportable US assets for T1135 purposes:

Personal use real property
US IRA and 401k accounts
Certain trust assets

However, both the Roth and the regular brokerage account will need to be reported, assuming you meet the criteria detailed on the T1135 – Foreign Income Verification Statement:

If you hold foreign property over $100k, but under $250k, in cost basis, you can report via the Simplified Method.
If you hold over $250k, you will need to use the Detailed Method.

Don't forget your US bank accounts - They need to be reported as well. {Subsection 233.3(1)}

Detailed Method

Assuming you hold over $250k in US investments in your a non-registered US-based broker account, you will need to line-by-line report each and every individual security held in the brokerage account in Section 2 of the T1135, along with each security’s cost basis. (Yes, really.)

This is tricky for two reasons:

The broker does not always accurately track the cost basis. (For more reading on cost basis tracking, go here.)
Say your US-based investment account has 50 individual stocks. You (or your accountant) will be detailing 50 individual line items. This just generally sucks, and can be expensive.

One More Thing

US-based brokers and investment advisors generally can't hold investments for non-US residents, unless specifically licensed to do so. So, if you do have non-registered investments sitting with a US broker, you definitely want to ask them if you can have the account legally managed from the US. (Buzz-word: "Dual-licensed investment firm.)