Line 40500 - Federal foreign tax credit
Line 40500 - Federal foreign tax credit
You may be able to claim the federal foreign tax credit for foreign income or profit taxes that you paid on income you earned outside Canada and reported on your Canadian tax return. Tax treaties with other countries may affect whether you are eligible for this credit.
Foreign income and foreign taxes must be converted to Canadian dollars. Use the Bank of Canada exchange rate in effect on the day these amounts arise. If you received a monthly pension or multiple payments at different times during the year, use the average annual exchange rate.
The average monthly rate and the daily rate are available by going to bankofcanada.ca/rates/exchange.
For more information about reporting foreign income and other foreign amounts, see page 10.
Note
If you deducted an amount on line 25600 of your return
for income that is not taxable in Canada under a tax
treaty, do not report that income, or any tax withheld
from it, in your foreign tax credit calculation.
Completing your return
Complete Form T2209, Federal Foreign Tax Credits, and enter the amount from line 12 on line 40500 of your return.
Complete Form 428 for your province or territory of residence to calculate the provincial or territorial foreign tax credit that you may be entitled to.
Attach to your paper return your completed Form T2209 and documents, such as official receipts that show the foreign taxes that you paid and a note showing your calculations. If you paid taxes to the United States, attach your W-2 information slip, U.S.1040 return, U.S. tax account transcript, and any other supporting documents that apply.
If any of your documents are in a language other than English or French, the CRA needs a copy of the original documents written in the foreign language with an acceptable English or French translation.
To be acceptable, the signatory's name must be printed in the Latin alphabet and the translation must meet one of the following conditions:
-
be certified by an official with the authority to administer an oath or solemn declaration (commissioner of oaths, notary public, or lawyer) unless it was done by a translator who is a member in good standing of one of the provincial or territorial organizations of translators and interpreters of Canada
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have the seal and signature of an official from the foreign country's embassy, high commission, or consulate confirming it is a true translation
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have the signature of the Chartered Professional Accountant (CPA) confirming it is a true translation
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have a written statement indicating the profession and the signature of a teacher, professor, or a religious leader confirming it is a true translation
Note
To be acceptable, the taxpayer's name cannot be the
same as the signatory's name.
Recapture of investment tax credit
If you have to repay all or part of an investment tax credit that you previously received for scientific research and experimental development or child care spaces, complete Form T2038(IND), Investment Tax Credit (Individuals), to calculate the amount you have to repay.
Enter the result on the line for "Recapture of investment tax credit" on your return.
Federal logging tax credit
If you paid logging tax to a province for logging operations you performed in the province, you may be able to claim a logging tax credit.
To calculate your credit, use the lesser of the following two amounts for each province you had a logging operation in:
-
66.6667% of the logging tax paid for the year to the province
-
6.6667% of your net logging income for the year in the province
Enter the total of the credits for the year for all provinces, up to 6.6667% of your taxable income from line 26000 of your return, not including any amounts on lines 20800, 20805, 21000, 21400, 21500, 21900 and 22000 of your return.
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