Foreign Source Income

If you are a Canadian resident and have received income from foreign sources, you must report this income in Canadian dollars on your tax return.

To convert the foreign source income, you must use the rate of exchange that was in effect at the time the income was received or the average exchange rate for the year as published by the Bank of Canada if the amount was received at various times throughout the year. You must report the amount of foreign income before deducting any tax that was withheld at the source. However, if you have paid tax on that same income in a foreign country, the amount of foreign tax paid might be eligible for a foreign tax credit or deduction on your Canadian income tax return.

Some foreign source income might also be exempt under international tax treaties.

There might be several tax planning opportunities, depending on the source and type of foreign income you received. To help you identify these opportunities, consult a Chartered Professional Accountant.