Canada

Individual - Foreign tax relief and tax treaties

Last reviewed - 17 June 2020

Foreign tax relief

Relief for foreign taxes in the Canadian system is accomplished through a tax credit and deduction mechanism. A foreign tax credit of up to 15% for any foreign tax withheld at source on property income (other than income from real property) is allowed, although the credit cannot exceed Canadian tax payable on the foreign income. When the foreign tax exceeds 15% of the income, the excess foreign taxes may be allowed as a deduction from the property income. This provision can have adverse implications for foreign citizens who have foreign property income and live in Canada.

Foreign social security taxes, other than United States (US) social security taxes paid under the United States Federal Insurance Contributions Act (FICA), generally do not qualify as non-business income taxes for foreign tax credit purposes.

Tax treaties

Canada has concluded double-taxation agreements (DTAs) with the following countries:

Algeria France Luxembourg Slovak Republic
Argentina Gabon Madagascar Slovenia
Armenia Germany Malaysia South Africa
Australia Greece Malta Spain
Austria Guyana Mexico Sri Lanka
Azerbaijan Hong Kong Moldova Sweden
Bangladesh Hungary Mongolia Switzerland
Barbados Iceland Morocco Taiwan
Belgium India Netherlands Tanzania
Brazil Indonesia New Zealand Thailand
Bulgaria Ireland Nigeria Trinidad and Tobago
Cameroon Israel Norway Tunisia
Chile Italy Oman Turkey
China (PRC) - does not apply to Hong Kong Ivory Coast Pakistan Ukraine
Colombia Jamaica Papua New Guinea United Arab Emirates
Croatia Japan Peru United Kingdom
Cyprus Jordan Philippines United States
Czech Republic Kazakhstan Poland Uzbekistan
Denmark Kenya Portugal Venezuela
Dominican Republic Korea, Republic of Romania Vietnam
Ecuador Kuwait Russia Zambia
Egypt Kyrgyzstan Senegal Zimbabwe
Estonia Latvia Serbia
Finland Lithuania Singapore