Do I need to declare income I earned from sources outside Canada?
Reporting foreign income
The way you report your foreign income depends on the type of foreign income you have (such as capital gains, investment, rental, etc.).
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 be able to claim a foreign tax credit on your federal return.
All amounts must be reported in Canadian dollars. Use the Bank of Canada exchange rate that was in effect on the day you received the income. If you received income a number of times during the year, use the average annual foreign exchange rate.
If you immigrated to Canada and became a resident, then there is a deemed disposition and deemed re-acquisition of any property that you held or brought with you. This has the effect of forming a cost base for all the property you held at the time you became a resident. If you dispose of the property (for example, by selling it), this cost base will be used to calculate your capital gain or loss. There could be some exemptions for certain capital property, depending on the tax treaty between Canada and the country from which you emigrated.
Reporting foreign property and investments (T1135)
The CRA requires you to report foreign property and investments if the total cost is greater than $100,000 in Canadian currency at any time during the year. CRA could impose penalties for failing to report this information on your T1135.
- How do I report foreign income, pension, and other foreign amounts?
- Bank of Canada Exchange Rates
- How do I enter foreign income that is subject to a tax treaty?
- Tax treaties (CRA description)
- Line 405 – Federal foreign tax credits
- T1135 Foreign Income Verification Statement (CRA list of types of foreign properties and investments)