Hey,
I am in Canada on Open Work Permit (not working in Canada at the moment), and I have a foreign income (salary). This income I am getting from the foreign country is tax-exempt because the amount I receive is low and falls under the non-taxable category there. Now, after filling the Foreign Income part in my taxes, I see that I need to pay a big amount of tax in Canada for this income. I will add that there is a tax treaty between Canada and this foreign country.
I am confused and will appreciate knowing if I still need to pay taxes in Canada for my foreign income.
Thank you.
Whether you need to declare income from outside sources is dependent on a variety of factors, ranging from the type of income you have earned to the size and quantity of your investments.
Foreign income
If you paid withholding taxes to a foreign country on the income you earned, the CRA does not allow you to decrease your income by that amount. Instead, you may claim a foreign tax credit on your federal return. For more information, visit Line 40500 - Federal foreign tax credit.
Note: All amounts must be reported in Canadian dollars. More information about foreign income and how to declare it you can find in TurboTax FAQ Do I need to declare income I earned from sources outside of Canada?
Thank you for choosing TurboTax
Thanks for your answer.
The foreign amount I received is non-taxable in this foreign country, which means I don't need to pay taxes in this country for this income because the amount is low and exempted from taxes there. Now, in my taxes here I put the amount of 0 (zero) dollars under the section of Foreign Tax Paid On Employment Income, again, because this salary income is low and exempted from taxes there. Now, the system asks me to pay taxes for this in Canada...
I will appreciate knowing what should I do?
Thanks!!