Buying property in Bali from Canada: T1135, the CRA and foreign tax credits

What a Canadian can own in Bali

Indonesian land law doesn't look at your passport, only at whether you're a citizen. The Basic Agrarian Law (5/1960) gives freehold, Hak Milik, to Indonesians alone. As a Canadian you have the routes every foreign buyer has: a registered leasehold, Hak Pakai once you're living here with a KITAS or KITAP, or your own foreign-owned company (PT PMA).

In practice most Canadians sign a leasehold. Nine of every ten properties in our catalog are offered that way (our count, September 2026). Hak Pakai starts at Rp 5 bn for a Bali house under Ministerial Decree 1241/2022, so it suits a buyer who moves here more than one who rents out. Our leasehold vs freehold guide explains what each title actually gives you.

One structure to walk away from is the nominee, where an Indonesian holds the land on paper for you. Such deals are void under Article 26(2) of the 1960 law, and a court won't return the purchase price.

Form T1135: when a Bali villa has to be reported

T1135 applies once the total cost of your specified foreign property passes 100,000 in Canadian currency at any time in the year. At Bank Indonesia's transaction rate of Rp 12,635 on September 24, 2026, that's about Rp 1.26 bn. Only a handful of listings in our catalog sit below it, the cheapest at Rp 1.00 bn, so a rented Bali villa usually crosses the line on its own.

What decides it is how you use the place. The form's real estate category reads "real property outside Canada (other than personal use and real estate used in an active business)". A villa your family uses mainly for its own holidays stays off. A villa run as a rental through a management company goes on, and so does the Indonesian bank account that collects the payouts.

The form is due with your income tax return. Below 250,000 in total cost, about Rp 3.16 bn, you can use the simplified method in Part A. Above it you list each property with its country, cost, income and gain.

Source: CRA, Questions and answers about Form T1135, April 15, 2026; CRA, Foreign Income Verification Statement, August 10, 2026; CRA, Penalties, June 12, 2025; Bank Indonesia, kurs transaksi, September 24, 2026

Rent: form T776, CCA and the credit for Indonesian tax

Indonesia takes its cut before the money reaches you. Because you don't live there, 20% of the gross rent is withheld as PPh 26, and not a rupiah of expenses comes off first. The Canada–Indonesia tax convention, signed January 16, 1979 and amended by the protocol of 1998, leaves that right with Indonesia in Article 6.

In Canada the villa is a rental property like one in Kelowna. Net rent goes on Form T776, converted at the Bank of Canada rate, and the CRA accepts the annual average if you use it consistently. You deduct management, repairs and utilities, and the building goes in a capital cost allowance class, often Class 1 at 4% declining balance. CCA can't create or increase a rental loss.

Then comes the credit. On income from real property, the Indonesian tax qualifies in full under section 126(1) of the Income Tax Act, up to the Canadian tax on the same income. The 15% cap many Canadians have heard about applies to foreign dividends and interest, not to rent from a building. Any Indonesian tax you can't credit may be deducted from income under subsection 20(12) instead, and you choose which way to take it.

Source: Income Tax Law (Indonesia), Article 26; Canada–Indonesia tax convention, 1979, with the 1998 protocol, Article 6; CRA, T4036 Rental Income, Rev. 25; Income Tax Act, sections 20(11), 20(12) and 126 (Justice Laws, current to September 3, 2026)

Selling the villa: the 50% inclusion and the principal residence

Canada taxes a gain on a Bali villa at the ordinary 50% inclusion rate. The planned increase to two-thirds was first pushed back to January 1, 2026 and then cancelled on March 21, 2025, so nothing changed. Cost and proceeds convert at the rate on each date, which means the rupiah's moves land inside your gain or loss.

The principal residence exemption isn't limited to homes in Canada. CRA Folio S1-F3-C2 says a property outside Canada can qualify if you ordinarily inhabit it. A family unit can designate only one property per year, though, so every year you give the Bali house is a year your Canadian home loses.

Indonesia also taxes the sale, and Article 13 of the convention lets it. On a titled property Indonesia keeps 2.5% of the sale price as final tax (PP 34/2016). Assigning a leasehold follows other rules. That Indonesian tax is what you then credit on your Canadian return. The full cost of an exit is on our page about selling.

Source: Scotia Wealth Management, April 7, 2025; Wolters Kluwer on the cancelled inclusion rate change, 2025; CRA Folio S1-F3-C2, paragraph 2.74; Canada–Indonesia convention, Article 13; PP 34/2016

If you move to Bali: departure tax

Leaving Canada for good triggers a deemed sale of most of what you own, at fair market value, on the day you become a non-resident. Canadian real estate is exempt from that rule. A villa in Bali isn't. Any gain built up while you lived in Canada is taxed when you leave, even if you never sell.

If everything you own is worth more than 25,000 in Canadian currency when you emigrate, about Rp 316 million, you also file Form T1161. On the Indonesian side, 183 days in any 12 months can make you a tax resident taxed on worldwide income, as our tax residency guide explains. Plan the exit from Canada and the entry to Indonesia as one move.

Getting the money there, and the rent back

A 2015 Bank Indonesia rule makes the rupiah the only currency for deals done inside the country. So the money leaves your Canadian bank as a wire, converts, and lands in the Indonesian account your contract names, one payment stage at a time. Allow one to five working days each. Don't fly in with cash, because customs wants a declaration from Rp 100 million.

Rent leaves Indonesia freely. Ask the manager for every PPh 26 withholding slip, because the CRA may want proof of foreign tax. Holding the villa through a PT PMA moves the Indonesian tax to the company, and dividends to an individual Canadian then carry 15% withholding under the convention. Fees and timing are in our money transfer guide.

Visiting before you buy, and where to look

Canadians need a visa to enter Bali, bought at the airport or online as an e-VOA. The fee is Rp 500,000, the stay 30 days, and one 30-day extension is allowed. The island adds a Rp 150,000 tourist levy per visit. Two weeks on the ground is usually enough to see three or four areas and a dozen properties.

Before you fly, narrow the list. Our area guides show where nightly rentals work and where longer stays do, and the catalog lists each property with its lease term and a net yield estimate. For a managed villa we model 6–10% net a year, before Canadian tax.