Who this is for
Residents of Canada with family, property, work or investments in more than one other country. Common in Surrey: India plus the United States, India plus the Gulf, or the UK plus India.
The six points
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Residency is the starting point. If you are a resident of Canada for the year, worldwide income is reported. If your residency changed during the year, the return covers the resident part. Our guides on arriving and on leaving explain the dates.
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Each country, each type. Keep income by country and by type: employment, rent, interest, dividends, capital gains, pension. The credit calculation is done per country, and business income is separated from other income.
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Convert to Canadian dollars. Use the exchange rate when the income was received, or the CRA’s annual average where that is allowed. Note the rate used.
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Credit only where tax was paid. A foreign tax credit needs proof the tax was paid and final in that country. Zero foreign tax means zero credit and full Canadian tax.
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Treaties can change the treatment. Canada has tax treaties with India, the United States and many other countries. They can decide which country taxes a pension, or limit withholding on interest. Where a treaty applies, the paperwork follows the treaty, not the default.
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Property over $100,000 outside Canada. Add up the cost of foreign deposits, investments and rental property across all countries. If it exceeded $100,000 Canadian at any time, the T1135 form is due.
One thing many people do not realize
Income from a country that charges no income tax is fully taxable in Canada. Salary earned in the UAE while you were a resident of Canada is the usual example. There is no credit to offset it. The absence of foreign tax does not make the income foreign. Residents who assume tax-free abroad means tax-free at home are the ones who get the largest surprise.
What to prepare
- For each country: income statements, tax returns filed there, proof of tax paid, and dates
- Exchange rate notes or the dates received
- A list of property held outside Canada, by country, with cost
- Your residency dates if they changed in the year
When professional help may make sense
Three or more countries, a US filing obligation, treaty questions, or income through a foreign company or trust. These are the situations where a cross-border specialist may be needed, and we will say so.
How Rex Tax may be able to help
We prepare Canadian returns with income from multiple countries and calculate the credits per country. We prepare the T1135 where it applies and keep the records organised by country for next year.
Official sources
- CRA: Federal foreign tax credit (line 40500)
- CRA: Questions and answers about Form T1135
- CRA: Newcomers to Canada
This guide is general information, not advice about your situation. It reflects the rules for the 2025 and 2026 tax years. It has not yet been reviewed by a practitioner. The information was checked against the official sources listed above on the date shown. Rules change. Check the official sources above or ask us. How we prepare these guides.