Maximize Your Foreign Tax Credits with Bestax
At Bestax, we help you claim every foreign tax credit you deserve and avoid paying more than you should.
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with Foreign Tax Credits
If you’re a Canadian earning money outside the country, you may qualify for foreign tax credits. These credits help make sure you don’t pay tax twice on the same income.
To claim them, you need to follow certain rules and fill out the right forms. Mistakes can cost you money, but with the right help, you can make sure you get every credit you deserve. That is where we come in!
At Bestax, our team helps Canadians understand these rules and claim the full amount they deserve. We make the process simple, so you can reduce your tax bill and keep more of what you earn.
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How Can We Assist You in Claiming Foreign Tax Credits
With our team’s experience, you’ll claim every credit you qualify for, quickly and with confidence.
01
Calculation of Foreign Income
We assist in determining your total foreign income for the tax year. This includes converting foreign income to Canadian dollars using the appropriate exchange rates, as specified by the Bank of Canada.
02
Determination of Foreign Taxes Paid
Our team helps identify and document the foreign taxes you’ve paid. We ensure that only eligible taxes are considered according to the criteria set by CRA.
03
Completion of Form
We guide you through the completion of Form T2209, which calculates the federal foreign tax credit for non-business income.
04
Preparation of Provincial or Territorial Forms
Depending on your province or territory of residence, we assist in completing the necessary forms, such as Schedule T2036, to claim the provincial or territorial foreign tax credit.
05
Accurate Reporting
We ensure that all foreign income and taxes are reported accurately on your T1 General Income Tax and Benefit Return.
06
Strategic Planning for Maximum Tax Relief
Beyond filing, we offer strategic advice to maximize your foreign tax credits. This includes utilizing carry-forward or carryback provisions to reduce double taxation.
Hire Canada’s Trusted Experts to Maximize Your Foreign Tax Credit Claim
You don’t have to claim your foreign tax credits alone. Contact Bestax today to schedule a consultation and ensure you claim the full amount.
Who Is Eligible for Provincial or Territorial
Foreign Tax Credits in Canada
Canadian corporations and authorized foreign banks that meet specific criteria can claim a provincial or territorial foreign tax credit.
Canadian Residency Requirement
To qualify, the corporation must be a resident of Canada throughout the tax year.
Permanent Establishment in the Province or Territory
The corporation must have a permanent establishment in the province or territory at any time during the tax year.
Foreign Investment Income
The corporation must have foreign investment income for the tax year.
Quebec and Alberta Exceptions
Corporations cannot claim foreign tax credits for the provinces of Quebec and Alberta on the federal return, as these provinces collect their own income taxes.
Exceeding the Federal Credit
The provincial or territorial foreign tax credit is available only if the foreign non-business income tax paid exceeds the federal foreign non-business income tax credit deductible for the year.
Separate Calculations per Jurisdiction
For each province or territory for which a credit is claimed, a separate calculation must be done.
Understanding Key Rules and
Limitations for Foreign Tax Credits
When claiming a foreign tax credit, it’s important to understand the rules and limits.
To qualify for a credit:
- The tax must be paid to a foreign government.
- It must relate directly to the foreign income reported on your Canadian return.
- Only income, war profits, and excess profits taxes qualify.
- Taxes paid to foreign governments on income earned outside Canada are eligible.
How Bestax helps:
- We verify if the taxes you paid meet CRA requirements.
- We help collect and organize the right documents to support your claim.
The CRA requires separate calculations for:
- Business income
- Non-business income (like investment or employment income)
Each category follows different rules:
- Foreign business income tax credits can be carried forward up to 10 years or back 3 years.
- Foreign non-business income tax credits are non-refundable and cannot be carried forward or back.
How Bestax helps:
- We make sure your income is classified correctly.
- We calculate the proper credits for each category.
- We ensure your claim follows CRA’s specific rules.
If you can’t use all your foreign tax credits this year:
- You can carry them forward for up to 10 years.
- Or carry them back for up to 3 years.
- This helps reduce taxes in other years.
How Bestax helps:
- We track and manage your unused credits.
- We advise on the best strategy to apply them.
- We complete forms like Schedule 21 to claim them correctly.
When Canada has a tax treaty with another country:
- The treaty decides how much foreign tax credit can be claimed.
- It helps prevent the same income from being taxed twice.
How Bestax helps:
- We review tax treaties that apply to you.
- We make sure you use treaty benefits properly.
- We help reduce or avoid double taxation to maximize your credits.
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Our Success Stories
Kim Angelo
I used Bestax for corporate taxes and honestly the process was so much easier than I expected. They explained everything in simple language, no jargon, and the filing was done on time. I felt confident leaving it in their hands.
Margie Wilson
I recently started my own tattoo parlor, and these guys helped me out from day one. They walked me through setting up my business and gave me sound advice on handling my accounting. What I like most is that they don’t try to oversell you things you don’t need. You can tell they’re more interested
Lisa Wilson
These folks know their accounting. I run a small IT consultancy and they helped streamline my invoices, CRA reports, and year-end tax filings. No more spreadsheets and late nights for me.
Thomas Dawkins
Incorporating my second business felt easy thanks to their help. The whole process was smooth, and they even gave some good tips for naming conventions and tax planning.
Lisa Richards
I can’t say enough good things about them. They made setting up my business a breeze and took care of everything from the HST registration to setting up my corporate tax filings
Frequently Asked Questions
What is a foreign tax credit, and why is it important?
A foreign tax credit lets Canadians reduce their Canadian tax by the amount of foreign taxes paid on income earned abroad. It prevents double taxation, so the same income isn’t taxed twice.
Who is eligible to claim a foreign tax credit in Canada?
Canadian residents who pay income or profit taxes to a foreign government on income earned outside Canada may qualify. Both individuals and corporations can claim it if they meet CRA rules.
How do I calculate the amount of foreign tax credit I can claim?
Your credit is the lesser of the foreign taxes paid or the Canadian tax owed on that same income. You must calculate it separately for business and non-business income.
Can I claim a foreign tax credit for taxes paid to any country?
Yes, as long as the tax is an income or profits tax and not a fee or service charge. However, tax treaties may affect how much credit you can claim.
What documentation do I need to support my foreign tax credit claim?
Keep copies of tax slips, receipts, or official documents showing the foreign taxes paid. The CRA may ask for these to confirm your claim.
Can I carry forward or carry back unused foreign tax credits?
Yes. You can carry them forward for up to 10 years or back for up to 3 years to lower taxes in other years.
How do tax treaties affect my foreign tax credit?
Tax treaties define which country can tax specific income and may reduce or limit your credit. They help prevent double taxation by setting clear rules.
Are there provincial or territorial foreign tax credits?
Yes. Most provinces and territories allow a credit for foreign taxes paid, but Quebec and Alberta handle their own income taxes separately.
Can I claim a foreign tax credit if I earn income through a TFSA or RRSP?
No. Income earned inside a TFSA or RRSP is tax-sheltered, so any foreign taxes paid within those accounts don’t qualify for credit.
How can Bestax assist me with claiming foreign tax credits?
Bestax reviews your situation, checks your eligibility, and ensures you claim every credit you qualify for. Our goal is to help you pay only what you owe, and nothing more.