When does my client need Form T1142 or T1141 for a nonresident trust?
Your Canadian resident client files Form T1142 for any year, 2026 included, in which it was beneficially interested in a nonresident trust and received a distribution from it or owed it money. It's due on the client's own filing due date, on paper only. Form T1141 is for contributors who transferred or loaned property to the trust.
Which form does your client file: T1142, T1141 or T1135?
Start from what your client did with the trust. Received money or property from it, or owes it money: T1142 under section 233.6 laws-lois.justice.gc.ca. Transferred or loaned property to it: T1141 under section 233.2
laws-lois.justice.gc.ca. Holds a trust interest that counts as specified foreign property: T1135, which then replaces the T1142 for that trust
canada.ca.
| T1142 | T1141 | T1135 | |
|---|---|---|---|
| Who files | A Canadian resident beneficially interested in the trust | A Canadian resident contributor, connected contributor or resident contributor | A Canadian resident whose specified foreign property cost more than $100,000 at any time in the year |
| What triggers it | A distribution received from, or a debt owed to, the trust in the year | A transfer or loan to the trust, in this or any earlier year, that was not an arm's length transfer | The cost threshold, whatever the trust paid out |
| Which years | Only years with a distribution or a debt | Every year the client stays a contributor, even with no new contribution | Every year over the threshold |
| Income Tax Act | Section 233.6 | Section 233.2 | Section 233.3 |
| Electronic filing | No, paper only | No, paper only | See the T1135 page |
For 2025 and later tax years, both forms come in revised versions with one supplement per trust, new questions on how the trust is administered, and a section listing the supporting documents you attach canada.ca. The T1135 rules are on T1135 filing requirements.
Who has to file T1142, and who is exempt?
The filer is a specified Canadian entity: a Canadian resident individual, corporation or trust, or a partnership, that was beneficially interested in a nonresident trust at any time in the year and received a distribution from it or was indebted to it in the year canada.ca.
Mutual fund corporations and trusts, nonresident owned investment corporations, persons whose taxable income is fully exempt from Part I tax, registered investments and trusts in paragraphs (a) to (e.1) of the subsection 108(1) "trust" definition don't file. Neither does a partnership whose nonresident or exempt members take 90% or more of its income or loss.
These situations need no T1142 canada.ca:
| Situation | Why no T1142 |
|---|---|
| Distribution from a US IRA or another foreign retirement arrangement | Excluded trust |
| Distribution from a foreign pension or employee benefit trust exempt from tax where it lives | Excluded trust |
| Client already files T1134, T1135 or T1141 for that trust in the same year | The other form covers it |
| Individual's first year as a Canadian resident | Exempt for that year only |
| Distribution from a foreign estate still being administered after a death | Estate that arose on death |
The T1135 overlap is where files go wrong. An interest in a nonresident trust is specified foreign property, except one that neither your client nor a related person acquired for consideration laws-lois.justice.gc.ca. A child named as a beneficiary of a parent's trust abroad usually paid nothing for that interest, so the trust stays off the T1135 and every distribution year needs a T1142.
Indebtedness on T1142 means your client owes the trust
Section C of the T1142 covers debts the reporting entity owed to the nonresident trust at any time in the year, each debt listed separately: the date incurred, interest rate, original principal, unpaid principal and interest at year end, interest paid or credited, and whether Part XIII tax was withheld canada.ca. The form's own summary puts it as receiving "a distribution or loan" from the trust.
The reverse case, your client lending to the trust, is not a T1142 item. A loan to the trust that isn't an arm's length transfer is a contribution under subsection 94(1), and that makes your client a contributor who files T1141 laws-lois.justice.gc.ca.
Distributions go in Section B. Report cash and cheques at the amount received, and other property (real estate, shares) at an estimated fair market value when distributed; no formal appraisal is needed. Tick income or capital for each item, report in Canadian dollars at the exchange rate on the transaction date (an average rate is accepted for distributions spread across the year), round to the dollar and enter 0 rather than leaving a field blank.
What a late or wrong T1142 costs, next to T1141
The CRA's foreign reporting penalty table applies fewer tiers to the T1142 than to the T1141 canada.ca. The amounts come from subsection 162(7), 162(10) and 162(10.1)
laws-lois.justice.gc.ca and paragraphs 163(2.4)(b) and (e)
laws-lois.justice.gc.ca.
| Penalty | T1142 | T1141 |
|---|---|---|
| Filed late, 162(7) | Greater of $100 and $25 a day, up to 100 days ($2,500 cap) | Same |
| Knowing or grossly negligent failure to file, 162(10)(a) | Does not apply | $500 a month up to 24 months, less the 162(7) penalty ($12,000 cap) |
| Ignoring a demand under section 233, 162(10)(b) | $1,000 a month up to 24 months, less the 162(7) penalty ($24,000 cap) | Same |
| Unfiled past 24 months, 162(10.1) | Does not apply | 5% of the fair market value of contributions to the trust, less the 162(7) and 162(10) penalties |
| False statement or omission, 163(2.4) | Greater of $2,500 and 5% of the distributed property's value plus the greatest unpaid principal owed, counting only the items misreported | Greater of $24,000 and 5% of the fair market value of contributions to the trust |
| Due diligence exception, 233.5 | Not available | Available |
Worked example. Your client lives in Ontario and is a discretionary beneficiary of her father's trust in the UK. In 2025 the trust paid her $60,000 and lent her $150,000, the largest balance outstanding in the year. She paid nothing for her interest, so there is no T1135 for this trust and the T1142 was due with her return. She filed it 45 days late.
| Step | Amount |
|---|---|
| Days late (cap 100) | 45 |
| $25 times 45 days | $1,125 |
| 162(7) penalty (greater of $100 and $1,125) | $1,125 |
| If the loan was knowingly left off: 5% of $150,000 | $7,500 |
| Compare with the $2,500 floor in 163(2.4)(e) | $7,500 applies |
| If both items were knowingly left off: 5% of $210,000 | $10,500 |
The T1142 floor is $2,500, not the $24,000 that applies to the T1141 and T1135, because paragraph 163(2.4)(e) sets its own amount. Penalty tiers for the T1135 are on T1135 penalty.
When does T1141 apply instead?
A Canadian resident files T1141 when, at the trust's year end, it's a contributor, connected contributor or resident contributor to the trust laws-lois.justice.gc.ca. Subsection 94(1) defines a contribution as a transfer or loan that isn't an arm's length transfer. Arm's length transfers include investment returns at arm's length rates and exchanges on terms an arm's length party would accept, provided none of the purposes was to give someone a beneficial interest in the trust
laws-lois.justice.gc.ca.
A contributor who was nonresident for the 60 months before a contribution, and stays nonresident through the period that ends 60 months after it, made that contribution at a "nonresident time", which keeps it out of the connected contributor test. A new immigrant who funded a family trust abroad years ago can still become a connected contributor by moving to Canada within 60 months of the contribution.
The T1141 is annual. It's due on your client's filing due date for the tax year in which the trust's year ends, and it keeps coming due every year your client stays a contributor, whether or not anything new was transferred canada.ca. Partners can elect under 233.2(5) to have one person file for the others.
Only the T1141 gets the due diligence exception: under section 233.5, information that wasn't available on the filing date can be left out if the return says so, your client tried in good faith to get it, and it's filed within 90 days of becoming available laws-lois.justice.gc.ca.
How do you file a T1142, and fix a missed one?
Neither form can be filed electronically. Even when the return went in electronically, or no return is required, mail a paper copy to the Winnipeg Taxation Centre, Data Assessment and Evaluation Programs, Validation and Verification Section, Foreign Reporting Returns, 66 Stapon Road, Winnipeg MB R3C 3M2 canada.ca. The T1141 goes to the same address
canada.ca.
The T1142 is due on the filing due date of your client's income tax return, or for a partnership the due date of its partnership information return. If no return is required, it's still due on the date the return would have been due canada.ca. Use the current form from the CRA's T1142 page
canada.ca, one supplement per trust. Attach supporting documents such as loan agreements once; send them again only when something changes, such as the repayment terms.
For missed years, the Voluntary Disclosures Program rules in force since October 1, 2025 generally give an unprompted application 100% penalty relief and 75% interest relief, and a prompted one up to 100% penalty relief and 25% interest relief. Foreign income or assets need documents for the most recent ten years canada.ca. More on the Voluntary Disclosures Program.
Sources
Does a distribution from a US IRA need a T1142?
No. A trust governed by a foreign retirement arrangement, such as a US IRA, is an excluded trust, so its distributions stay off the T1142 canada.ca.
Does an inheritance paid out of a foreign estate need a T1142?
Not while the estate is being administered: an estate that arose on a death is exempt. Once administration ends and the trust carries on, a Canadian beneficiary files a T1142 for every year it receives a distribution or owes the trust money canada.ca. The tax side of a foreign inheritance is on inheritance tax in Canada.
Is a T1142 due if my client has no return to file?
Yes. The form is due on the date the client's income tax return would have been due, and it goes on paper to the Winnipeg Taxation Centre either way.
Does my client file a T1142 in the year they move to Canada?
No. An individual, other than a trust, doesn't file a T1142 or a T1141 for the year they first become a Canadian resident. Both forms apply from the next year.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.