Who taxes my UK pension first, the UK or Canada?
Begin with what the payment is and which way you moved, because the pension article does not work symmetrically in practice. Frequently the country the pension arises in has the first claim and takes tax before the money reaches you, while the country you live in taxes the same payment and gives credit for the other's tax. Getting that order backwards is what produces double taxation on paper: a credit claimed in the wrong country, or relief claimed in neither. Settle the primary claim first, then build the credit around it.
Why is tax taken off my UK pension when I live in Canada?
Because deduction happens at source, under the paying country's own rules, before anyone weighs your residence or a treaty. That withholding is a payment on account, not a final answer. Two questions then need settling: whether the paying country has any right to tax that payment under the treaty, and if it has, at what rate. Only then does the Canadian side make sense, because Canada gives credit for foreign tax properly payable rather than for the amount someone deducted. Where the deduction exceeds the treaty position, recovery is claimed where it was deducted.
UK and Canadian tax years do not match. Which year do I claim?
You apportion rather than transpose. The two years do not begin on the same date, so a UK pension or rent runs through one UK year and across two Canadian ones. Canada wants the income in the year it was earned on Canadian rules, with the credit supported by UK tax attributable to that same period, which normally means splitting a UK computation rather than copying a total. Keep the statements that evidence the split. Where a UK figure settles only later, the Canadian return may have to be amended once it does.
Does the UK tax my rental income before Canada does?
For property in the UK, the country the land sits in normally taxes first, because land is taxed where it lies. You then report the same rent in Canada as a resident, recomputed under Canadian rules, which treat expenses and capital differently and so produce a different figure. Canada gives credit for the UK tax on that rent, capped at the Canadian tax on the same income. People who reverse the order and treat Canada as the first claimant end up seeking relief in the UK that the treaty does not give them.
Can I stop UK tax being deducted from my pension?
Sometimes, and the route runs through the UK side rather than the Canadian one. Where the treaty limits or removes the paying country's right to tax a particular payment, there is normally a way to have the deduction reduced going forward once Canadian residence is evidenced. That is an application, not an assumption: until it is granted, the payer keeps deducting. Two things are worth doing in the same exercise, fixing the future deduction and testing whether past deductions exceeded the treaty entitlement, because those are recovered separately and each carries its own time limit.
I took a lump sum from my UK pension. Who taxes it?
Establish what the payment was before arguing about which country taxes it. A periodic pension and a one-off withdrawal are not always treated alike under the pension article, so the first job is to characterise the payment from the scheme's own documentation. That characterisation decides which country holds the first claim, and therefore where relief is sought and where credit is given. A single large payment also lands in one year on both sides, which makes the mapping between two non-aligned tax years matter far more than it does for a steady monthly amount.
What counts as foreign income, and what is a foreign tax?
Foreign income is income sourced outside the country you are filing in — where the work was done, where the property sits, where the payer is resident, depending on the type. A foreign tax, for credit purposes, is a levy imposed by another country that functions as an income tax and that you were legally required to pay. Consumption taxes, property taxes and most social contributions are not, however real the cost. Sourcing is decided by rule, not by which bank received it. See the foreign tax credit.
What happens if the two countries disagree about which of them can tax me?
The treaty has a procedure for exactly that. You apply to the competent authority in your residence country, which takes the case up with its counterpart, and the two negotiate a position that removes the double taxation. Some treaties add binding arbitration if they cannot agree. It is slow and it runs on documents, so the practical work is preserving the record and filing protective claims while the clock runs. See our treaty work.
