Canada

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:

Notes

1. Canada has provided formal notice to the Russian Federation to suspend its tax treaty with Russia, effective 18 November 2024 for taxes withheld at source and in respect of other taxes. The suspension continues until otherwise decided by the Canadian and Russian governments.