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2015 Taxes - Reporting Foreign Income and Amounts that are not taxed
4-05-2016
When foreign amounts, including income, expenses, and foreign taxes paid, are reported on your Canadian personal income tax return, they must be reported in Canadian dollars.
Investment income is reported on Schedule 4 of your tax return. If you are using a software package to do your tax return, record the information from your tax slips in the tax slips area of the return.
Theamounts on your tax slip may not be in Canadian dollars. If they are not, you have to convert the amounts and enter the Canadian dollar amounts into the tax return.
When you record the amounts from your tax slips using tax software, any foreign withholding tax will automati cal I y be entered into the areas for calculating the federal and provincial foreign tax credits. The federal foreign tax credit is calculated on Schedule T2209, and at least a portion of it should reduce your taxes payable. The provincial or territorial foreign tax credit i s calculated on Schedule T2036. See the foreign tax credit article for how to deduct the amount not recovered by the foreign tax credit.
Converting to Canadian Dollars
The foreign exchange rate used to convert the foreign currency transaction into Canadian dollars is either Billed at the rate in effect on the date of the transaction, or billed at the average annual exchange rate for the taxation year as published by the Bank of Canada (noon rate).
If any income or expense that you have received or paid was converted to Canadian dollars as part of the transaction, then the Canadian dollar amount that you received or paid would be reported as your income or expense. For example: bullet If you have paid tax-deductible expenses by using your credit card, which converts the amounts into Canadian dollars, you would use the Canadian $ amount that you actually paid.
bullet If your foreign dividends are received in a Canadian $ account, so that they are converted automati cal I y, the amount you would report as a dividend i s the Canadian $ amount that you actual I y received.
Income that are not taxed
You do not have to report certain amounts in your income, including the following:
•any GST/HST credit or Canada child tax benefit payments, as well as those from related provincial and territorial programs;
'child assistance payments and the supplement for handicapped children paid by the province of Quebec;
Footnotes: Footnotes: This column is presented as a general source of information only and is not intended as a solicitation for business. Mohammed Yasin, CPA,CGA, is the principal of M. Yasin & Co. Inc., Certified General Accountants and has offices in Vancouver & Surrey,B.C.
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