Plain meaning
A credit that can help reduce Canadian tax where foreign tax has been paid on foreign-source income.
Also called
foreign tax credits
Key points
- Foreign Tax Credit depends on the eligibility rules set by the relevant tax, benefit, or program legislation.
- Filing an annual income tax and benefit return is often required so CRA can calculate eligibility and payment amounts.
- Amounts may depend on income, family status, age, disability status, residence, expenses, or the type of property or transaction involved.
- Because the credit is generally non-refundable, it usually reduces tax otherwise payable rather than creating a refund by itself.
Why it comes up
It matters for cross-border investors, workers, retirees, and businesses with foreign income. It can affect tax payable, benefit eligibility, after-tax income, or the timing of CRA-administered payments.