Do I claim a foreign tax credit if my employer abroad already withheld tax?
If you are resident here and that employment income is taxed in Canada as well, then yes, this is the mechanism that stops the same income being taxed twice. Withholding abroad is not the end of the matter; it is simply the foreign tax the claim is measured against. The claim belongs to the person who is resident in Canada, so the first thing to settle is the residence position for the year rather than the payslip. And the relief is not the whole of what was taken: it stops at the Canadian tax charged on that particular income, which is a narrower figure than the total foreign tax paid.
I paid tax in two countries on the same income, do I file Form T2209?
That is exactly the situation the federal foreign tax credit is for. It claims relief for income tax paid to another country on income Canada is also taxing. Two points decide what you actually get. The working is done country by country, and business and non-business income are kept apart within that, so one blended figure covering everything foreign is not a claim at all. And the relief stops at the Canadian tax charged on the same income, which is why establishing where each stream of income arose matters more than the total foreign tax on the statements.
Why is my foreign tax credit less than the tax I actually paid abroad?
Because the credit is capped by the Canadian tax on the same income. Where the foreign country taxed that income more heavily than Canada does, the credit absorbs the Canadian tax on it and the excess foreign tax is not relieved here. Excess credit on non-business income is generally lost rather than carried forward, so there is no later year in which to use it. When that shows up, the real question is usually whether the foreign tax was correctly imposed in the first place and should be recovered in that country.
Do I need a separate calculation for each country I earned income in?
Yes. The credit is computed separately by country and separately for business and non-business income, which means a person with income from three countries has several calculations rather than one. This is the step most commonly skipped. Pooling everything into a single foreign figure usually overstates the claim in one country and wastes it in another, and it cannot be supported when the workings are asked for. Keep the income, the foreign tax and the source documents separated by country from the start.
Can I carry forward foreign tax I could not use this year?
Not on the non-business side. Where the non-business relief exceeds what the Canadian tax on that income can absorb, the surplus generally falls away in that year and there is no later year to keep it for. That is why sourcing the income and pairing each foreign tax payment to it is worth doing as you go rather than at the end. Business income is a separate computation with its own treatment, so the first thing to establish is which of the two a particular stream of income actually is. People who assume everything foreign behaves the same way tend to find the unusable part only after the return has been filed.
Does foreign pension income qualify for the federal foreign tax credit?
Pension income taxed abroad sits within the credit alongside foreign employment, business and investment income, where the person receiving it is resident in Canada and the pension is being taxed here too. The mechanics are the same as for any other non-business source. The computation is made for the country that taxed the pension, and the relief stops at the Canadian tax charged on that pension. Where the foreign payer took more than the relief can absorb, the surplus is generally not recoverable through the Canadian return, which is why the rate applied at the payer is worth checking before the year ends rather than after it.
Can I avoid capital gains tax on a foreign property?
Not by virtue of it being foreign — there is no exemption for that, and the "keep it offshore" advice you may have read is how people acquire penalties rather than savings. What genuinely reduces the gain is ordinary and legitimate: principal residence relief where the property qualifies and the designation is made correctly, a properly built cost base including acquisition costs and capital improvements, the timing of the disposition, the treaty rules for real property, and credit for the foreign tax paid. See principal residence and foreign property.
How do I file Form 67?
Form 67 is the claim for foreign tax credit in an Indian return, filed online before you file the return it relates to. It reports the foreign income, the tax paid abroad and the treaty article relied on, and it needs the foreign tax evidence behind it. File it late or leave it out and the credit is at risk even when the underlying tax was genuinely paid. See foreign tax credit in India.
