Canada

Individual - Foreign tax relief and tax treaties

Last reviewed - 16 December 2019

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