T2209 - Federal Foreign Tax Credits

The Canada Revenue Agency says...

This credit is for foreign income or profits taxes you paid on income you received from outside Canada and reported on your Canadian tax return. Complete Form T2209, Federal Foreign Tax Credits, to calculate your credit and enter the amount from line 10 on line 405 of Schedule 1.

Note: You may have deducted an amount on line 256 for income that is not taxable in Canada under a tax treaty. In that case, do not include that income, or any tax withheld from it, in your foreign tax credit calculation.

If you paid tax to more than one foreign country, and the total non-business income tax you paid to all foreign countries is more than $200, you have to do a separate calculation for each country for which you claim a foreign tax credit. In that case, enter the total of your allowable federal foreign tax credit on Form T2209.

You also have to do a separate calculation for business income taxes paid to each foreign country. In that case, use this form to calculate your credit for both non-business income taxes and the business income taxes paid to each foreign country. For tax years ending before March 23, 2004, you can carry unclaimed foreign business income taxes back three years and forward seven years. For tax years ending after March 22, 2004, the carry forward period is 10 years.

In most cases, the foreign tax credit you can claim for each foreign country is whichever of the following two amounts is lower:
  • the foreign income tax you actually paid; or
  • the tax due in Canada on your net income from that country.
Note: If you paid tax on income from foreign property (other than real property), your foreign tax credit for the income from that property cannot be more than 15% of your net income from that property. However, you may be able to deduct on line 232 of your return the part of the foreign taxes you paid over 15%.
Beginning in 2004, your contribution to a foreign public pension plan is considered as a non-business income tax for foreign tax credit purposes where the following two conditions apply:
  • you are required to make the contribution under the legislation of the foreign country; and
  • it is reasonable to conclude that you will not be eligible for any financial benefit from your contribution considering that the employment in the foreign country was temporary and for a short period of time.
Note: U.S. FICA payments qualify for this credit.

Notes about form

Notes about form

Non-business income tax paid to a foreign country

Net foreign non-business income

Business income tax paid to a foreign country

Net foreign business income