Crypto assets may be subject to foreign property reporting requirements in Canada and Quebec. The Canada Revenue Agency (CRA) has clarified its position on crypto assets held through certain Canadian crypto trading platforms. However, significant uncertainties remain, particularly for crypto assets held in self-custody wallets or through decentralized finance (DeFi) protocols.
This guide explains the rules governing Forms T1135 and TP-1079.8.BE, their reporting thresholds, and the principal tax uncertainties surrounding their application to crypto assets.
Who Must Report Foreign Property?
Section 233.3 of the Income Tax Act establishes the federal reporting requirement. It applies to Canadian-resident individuals, corporations and certain trusts, as well as qualifying partnerships, where the total cost amount of their specified foreign property exceeds CAD $100,000 at any time during the taxation year or fiscal period, subject to the applicable statutory exclusions.
In Quebec, for taxation years and fiscal periods ending after December 30, 2025, the provisions governing designated foreign property are set out in sections 1079.8.15.8 and following of the Taxation Act. Form TP-1079.8.BE (2025-12 version) sets out the filing instructions for individuals, corporations, trusts, and partnerships to which the requirement applies.
Certain exclusions apply. At the federal level, for instance, an individual who becomes a resident of Canada for the first time is not required to file Form T1135 for that first year. The Quebec form also provides an exception for certain new residents. Other exclusions, particularly those involving certain entities or partnerships, must be examined in light of the circumstances.
What Is the Reporting Threshold?
Under both regimes, the general threshold is more than CAD 100,000, determined by reference to qualifying property held at any time during the year, not just on December 31.
- Federally, the cost amount of specified foreign property is aggregated under the rules of the Income Tax Act.
- In Quebec, the total cost of designated foreign property subject to the provincial rules must be considered.
The threshold is not limited to crypto assets. Other property, such as certain investments in foreign corporations, may also have to be included in the calculation.
It is also necessary to distinguish a property's tax cost from its fair market value (FMV). An increase in the market price of a crypto asset does not, by itself, increase its cost amount. Conversely, a decline in market value does not eliminate a reporting obligation already triggered when the cost of the qualifying property exceeds the threshold.
Example: The Threshold Applies Across Different Types of Property
At one point during the year, a Québec-resident individual simultaneously holds the following specified foreign property:
| Property | Assumed cost amount |
|---|---|
| Foreign shares held outside a registered plan | CAD 70,000 |
| Crypto assets held outside Canada | CAD 45,000 |
| Total | CAD 115,000 |
Essential assumption: Both the shares and the crypto assets are foreign property covered by the reporting rules, no exclusion applies, and the amounts shown are the relevant costs under each regime.
The combined cost amount of these properties is therefore CAD 115,000 at that time. The CAD 100,000 threshold is exceeded even though neither property individually exceeds that amount. The individual must assess the obligation to file the federal and Québec forms.
Are Crypto Assets Necessarily Foreign Property?
No. Federally, the definition of specified foreign property includes certain intangible property situated, deposited, or held outside Canada. The location of crypto assets for tax purposes must therefore be assessed, as it is not always clearly established.
Crypto Assets Held Through Trading Platforms
In Technical Interpretation 2023-0984901C6, the CRA states that cryptocurrencies held for Canadian clients through a trading platform that is resident in Canada and complies with Canadian regulations will generally not be considered situated, deposited, or held outside Canada.
Conversely, holding crypto assets through a foreign platform may give rise to a reporting obligation. In the same interpretation, the CRA notes that shares of a Canadian corporation held by a non-resident agent may constitute specified foreign property. This reasoning may also be relevant to crypto assets. A prudent approach is therefore to include crypto assets held through foreign trading platforms on Form T1135 when the reporting threshold is met and no exclusion applies.
The tax location of the property nevertheless depends on the circumstances, including the residence of the entity with which the taxpayer deals, custody arrangements, and the nature of the taxpayer's rights. In particular, beneficial ownership of the crypto assets must be distinguished from a claim against the platform.
Self-Custody Wallets
The location of crypto assets held in a self-custody wallet remains uncertain for tax purposes. In an analysis published in Canadian Tax Focus in November 2025, Jeffrey Liu and Jason Rosen propose determining that location by reference to where functional control over the crypto assets is exercised, particularly the ability to authorize their use and transfer.
Under this approach, crypto assets controlled using a hardware wallet kept and used in Canada could be considered held in Canada. The CRA has not officially adopted this interpretation.
What Property Is Excluded From the Calculation?
The federal definition of specified foreign property contains several exclusions, including:
- Property used or held exclusively in the course of carrying on an active business, subject to the statutory requirements;
- Personal-use property that meets the applicable tax definition;
- Property held in certain registered plans, including RRSPs and TFSAs;
- Other property expressly excluded by legislation.
Provincial exclusions must be considered separately, even where they resemble those under the federal regime.
In its technical interpretation 2023-0984901C6, the CRA explains that an adventure or concern in the nature of trade does not necessarily constitute the carrying on of an active business. Consequently, crypto assets held as part of such an undertaking do not qualify for the exclusion applicable to property used or held exclusively in the course of carrying on an active business.
Conversely, crypto assets used or held exclusively in the course of an actively carried on crypto-asset trading business are excluded from the definition of specified foreign property.
What Information Must Be Reported?
The federal and Quebec forms both provide a simplified reporting method and a detailed reporting method.
| Total cost of qualifying property during the year | Reporting method |
|---|---|
| More than CAD 100,000 at any time during the year, without reaching CAD 250,000 | Simplified method may be used |
| CAD 250,000 or more at any time during the year | Detailed method required |
The simplified method allows certain information to be reported in aggregate, including relevant property categories, countries, income, and gains. The detailed method requires additional information by category and by property or intermediary, as specified in the form instructions.
For Quebec, the 2025-12 version of Form TP-1079.8.BE provides Part 3.1 (simplified method) and Part 3.2 (detailed method). Certain fields request the cost of property, while others may request its fair market value. The definition applicable to each field must be followed rather than entering the same amount throughout.
The CRA's guidance on Form T1135 also explains the distinction between these reporting methods.
A taxpayer who exceeds the reporting threshold during the year may have to report property sold before year-end. Records of acquisitions, dispositions, and costs are therefore necessary, not just December 31 balances.
When and How Must the Forms Be Filed?
Form T1135 must generally be filed by the deadline applicable to the filer's federal income tax return, including in certain cases where no income tax return would otherwise be required.
Form TP-1079.8.BE must be filed by the deadline applicable to the corresponding Quebec income tax or information return. For the 2025 taxation year, the instructions require the following questions to be answered:
| Filer | Quebec return | Foreign property line |
|---|---|---|
| Individual | TP-1 | 25 |
| Corporation | CO-17 | 19c |
| Trust | TP-646 | 31.1 |
| Partnership | TP-600 | 25b |
For individuals, the usual filing deadline is April 30 of the following year, or June 15 when the extension rules applicable to self-employment are met. For corporations, the usual deadline is six months after the end of the taxation year. Trusts and partnerships have their own filing deadlines.
For 2025, individuals and corporations may file Form TP-1079.8.BE-V electronically using authorized tax software together with their income tax return, or submit it by mail. A corporation submitting the form by mail must send it separately from its CO-17 return. Trusts and partnerships must submit the form by mail.
An additional restriction applies to individuals for 2025: where more than ten designated foreign properties per property type are reported on Form TP-1079.8.BE-V, the Québec income tax return must be filed by mail rather than electronically. See Revenu Québec's tax form restrictions for 2025.
Form TP-1079.8.BE does not replace Form T1135 or Form TP-21.4.39-V -- Cryptoasset Return. The latter reports crypto-asset holdings and activities in Quebec, independently of the foreign-property reporting threshold.
What Penalties Apply if a Return Is Not Filed?
Foreign property reporting failures can result in penalties even when no additional income tax is owing.
Federal Penalties
According to the CRA's guidance on T1135 penalties, the ordinary failure-to-file penalty is generally the greater of CAD 100 or CAD 25 per day, to a maximum of CAD 2,500. Higher penalties may apply in certain aggravating circumstances.
Quebec Penalties
The instructions for Form TP-1079.8.BE (2025-12) distinguish several penalty regimes:
- Ordinary failure to file: CAD 25 per day of delay, up to CAD 2,500.
- Knowing failure or gross negligence: A penalty based on CAD 500 per month or part-month, for up to 24 months, may apply, subject to the adjustments and conditions provided by law.
- Prolonged delay or other serious non-compliance: Additional penalties, including penalties calculated with reference to the cost of property, may apply in the circumstances specified by law.
These penalties should not simply be added together. Certain provisions include reductions or coordination mechanisms. Whether a penalty applies and its precise amount depend on the nature of the failure.
What Records Should Be Kept?
To determine whether a return must be filed and support the information reported, it is useful to retain:
- The name, residence, and contractual terms of trading platforms or custodians;
- Documents establishing the legal nature of the rights held and, where possible, their location;
- Records of acquisitions, dispositions, and transfers, along with tax costs in Canadian dollars;
- Relevant balances and costs at different points during the year, including the maximum amounts required by the forms;
- Income, gains, and losses associated with qualifying property;
- Evidence supporting the application of an exclusion or a particular reporting method.
Analyzing the location and tax cost of crypto assets may require more than year-end statements, particularly where holdings are spread across several platforms and protocols.
Token Expert assists individuals and corporations with reconstructing their crypto-asset transactions, determining tax costs, and preparing the information needed for federal and Quebec reporting requirements.
Contact our team to discuss your situation.
References Consulted
- Canada. Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), section 233.3.
- Quebec. Taxation Act, CQLR, chapter I-3, sections 1079.8.15.8 and following.
- Revenu Québec. TP-1079.8.BE-V -- Foreign Property Return, 2025-12 version (PDF).
- Revenu Québec. Requirement to report foreign property held outside Canada, November 26, 2025.
- Canada Revenue Agency. Foreign Income Verification Statement -- Form T1135.
- Canada Revenue Agency. Questions and answers about Form T1135.
- Canada Revenue Agency. Form T1135 filing requirements for 2015 and later taxation years.
- Canada Revenue Agency. Technical Interpretation 2023-0984901C6, August 29, 2023, reproduced by Tax Interpretations (secondary host reproducing a CRA document).
- Canada Revenue Agency. Questions and answers about penalties -- foreign property reporting.
- Revenu Québec. TP-21.4.39-V -- Cryptoasset Return.
- Liu, Jeffrey, and Jason Rosen. "Applying Foreign Property Reporting Requirements to Cryptoassets," Canadian Tax Focus, vol. 15, no. 4, November 2025, p. 14. Canadian Tax Foundation.
- Revenu Québec. Tax Form Restrictions for the 2025 Taxation Year.
Disclaimer
This article is provided for informational purposes only and does not constitute tax, accounting or legal advice. The applicable treatment depends on the facts and the taxpayer's circumstances. Tax rules and filing requirements must be verified for the relevant taxation year.
Last reviewed: October 23, 2026.
