Line 23 - Federal foreign tax credit
This credit is available to a resident trust only for foreign income or profit taxes the trust paid on income it received from sources outside Canada. When you calculate the foreign tax credit, convert all amounts to Canadian currency. If the amount was paid at various times throughout the year, to get the applicable rate, go to bankofcanada.ca/rates/exchange or call 1-800-959-8281.
In general, the foreign tax credit you can claim for each foreign country is the lesser of:
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the tax the trust paid to a foreign country
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the tax payable to Canada on the portion of the income the trust earned in the foreign country
Use Form T3 FFT, T3 Federal Foreign Tax Credits, to calculate the trust's foreign tax credit. When you complete Form T3 FFT, base the calculation of the credit on foreign income amounts that have been retained by the trust and not allocated to a beneficiary. Do not include any amounts relating to the designation of foreign income and foreign tax credits to the beneficiaries. Enter on line 23, the amount from line 12 of Form T3 FFT.
The trust's federal foreign tax credit may be less than the tax paid to a foreign country. The trust can carry unclaimed foreign tax paid on business income back 3 years and forward 10 years.
The trust cannot carry forward or carry back excess amounts of any foreign non-business income tax. You may be able to claim some or all of the excess as one of the following:
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a provincial or territorial foreign tax credit on Form T3 PFT, T3 Provincial or Territorial Foreign Tax Credit (a trust resident in Quebec should contact Revenu Québec about its entitlement to this credit)
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a deduction on line 19 of the return (see archived Interpretation Bulletin IT-506, Foreign Income Taxes as a Deduction from Income) Send us proof of the tax the trust paid to a foreign country.
For more information, see Income Tax Folio S5-F2-C1, Foreign Tax Credit, and archived Interpretation Bulletin IT-201, Foreign Tax Credit - Trusts and Beneficiaries.
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