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Canada’s Income Tax Act requires Canadian residents to report all worldwide income on their income tax returns. This includes offshore or foreign pension income.

Canadian residents are required to report their foreign pension income even if it is not taxable in the country where it originates such as the UK. If you have not reported your offshore pension income you may be eligible to have one of our Canadian income tax lawyers submit a voluntary disclosure to avoid penalties and prosecution and possibly reduce interest owing.

The CRA has tax treaties or agreements with various countries that affect the tax obligations of Canadians working abroad and non-residents living in Canada. These tax treaties have been established to prevent incidences of double taxation and avoid tax evasion. These conventions define:-
● Taxes that feature cross-border tax implications
● Tax limits on the business income of non-residents
● Tax exemptions that apply to particular individuals
● Procedures for tax enforcement and tax dispute resolution

CRA tax regulations require anyone receiving a foreign pension to report the gross amount in Canadian dollars in line 11500 of the tax return form. The exchange rate used in converting the pension amount into Canadian dollars is the rate defined by the Bank of Canada. Pensioners should use the average monthly rate if they receive their foreign pension every month. The average annual rate is applicable in instances when the foreign pension income is received at different times of the year. Any tax deductions claims to the pension are made on line 25600 of the CRA income tax form. Claims for foreign tax credits are filled out in line 40500 of the same form.

No. The CRA views all foreign pensions as income and, therefore, taxable. However, tax deductions to foreign pensions do apply per provisions outlined in CRA tax treaties. Foreign pensions received from a tax treaty county typically feature an amount that the CRA cannot tax.
A pensioner claims this tax deduction on line 25600 of the CRA income tax form. If you have paid taxes on a foreign pension from a non-treaty country, you can claim a foreign tax credit on the pension. You fill out CRA’s form T2209 to claim tax relief via the foreign tax credit provision.

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Pro Tip

CRA Tax Audits

There are over 350,000 tax audit and review actions conducted by the Canada Revenue Agency on a yearly basis. Around 15,000 of these tax audits deal with “cash only” businesses (i.e. the underground economy). Additionally, an estimated 35,000 are tax shelter audits.

Get your CRA tax issue solved


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