Can I use my United Kingdom National insurance tax as a foreign tax credit on my Canadian return

Hi @micky5 

 

The short answer is generally no, you cannot directly claim your United Kingdom National Insurance contributions as a foreign tax credit on your Canadian income tax return.

 

Here's a more detailed explanation:

• What Qualifies as Foreign Income Tax Credit: In Canada, you can claim a foreign tax credit for income or profits taxes you paid to a foreign country on income you earned in that country and reported on your Canadian tax return. The purpose of this credit is to prevent double taxation.  
   
• National Insurance in the UK: United Kingdom National Insurance contributions are primarily for social security benefits in the UK, such as state pension, unemployment benefits, and healthcare. While they are a mandatory deduction from earnings, they are not typically considered an income tax for the purposes of foreign tax credits under Canadian tax law.  
   
• Tax Treaties: Canada has tax treaties with many countries, including the UK, to prevent double taxation on income. These treaties specify which types of taxes qualify for relief. While the Canada-UK tax treaty aims to avoid double taxation, it doesn't generally classify National Insurance as an income tax eligible for the foreign tax credit in Canada.

I am a Canadian citizen /resident employed on a contract in UK ; my primary residence is in Canada where I remit my worldwide income - I will be returning to Canada when the contract is complete - this mandatory tax (National insurance is calculated per my foreign income I am claiming in Canada ) it is not a benefit for me when I return to Canada 

@micky5 You can look at the Canada/UK tax treaty here: https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/united-kingdom-convention-consolidated-1978-1980-1985.html

 

Or you can contact the Canada Revenue Agency (CRA) and double check with them. 

 

If you are in Canada or the United States, you can call the CRA at 1-800-959-8281. If you are elsewhere, you can call 613-940-8495. This page has more ways to contact the CRA: Contact the Canada Revenue Agency