Skip to content
English
  • There are no suggestions because the search field is empty.

Foreign Income, Investment and Rental Glossary

Master the language of foreign income, investment and rental with this easy-to-navigate A–Z reference

 

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

  • Adjusted Cost Base – The original purchase price of a foreign investment or property, including legal fees and capital improvements, converted to Canadian dollars and used to calculate capital gains upon sale.
  • Canada Taxes Worldwide Income – CRA requirement that Canadian tax residents must report all global income, including employment, rental, investment, and pension income earned outside Canada.
  • Canada–U.S. Tax Treaty – An international agreement outlining how cross-border income like U.S. Social Security, 401(k), and IRA distributions are taxed for Canadian residents; allows partial exemptions or foreign tax credits.
  • Capital Cost Allowance (CCA) – An optional deduction that allows rental property owners to depreciate the cost of the building (not the land) over time. While it reduces rental income in the short term, it lowers the property’s tax cost base and may trigger recapture upon sale.
  • Capital Gains – Profits from selling non-Canadian investments or property, 50% of which are taxable in Canada; amounts must be reported in Canadian dollars using the correct exchange rate.
  • Capital Gains on Foreign Assets – Taxable gains from the sale of foreign investments or property, with 50% of the gain included in taxable income; must be converted to Canadian dollars using CRA-approved exchange rates.
  • Carry Forward Limit – The CRA allows unused federal and Quebec foreign tax credits to be carried forward for up to 10 years from the original tax year in which the foreign tax was paid.
  • Currency Conversion (Foreign Income) – The CRA requirement that all foreign income be converted to Canadian dollars using either the Bank of Canada’s daily rate or annual average rate, depending on the nature and frequency of the income.
  • Currency Exchange Rate – CRA requirement to convert all foreign income to Canadian dollars using either the daily Bank of Canada rate or the annual average, depending on when the income was received.
  • Expired Foreign Tax Credits – Unused foreign tax credits that are not claimed within the 10-year carryforward period will expire permanently and cannot be recovered or carried back to prior years.
  • Foreign Dividends and Interest – Investment income from non-Canadian sources, fully taxable in Canada and potentially eligible for a foreign tax credit if tax was withheld abroad.
  • Foreign Employment Income – Wages or salary earned abroad that must be reported on the T1 tax return, typically on line 10400 or 10402, and claimed in Canadian dollars with the option to offset with a foreign tax credit.
  • Foreign Investment Income – Taxable earnings from non-Canadian sources such as interest, dividends, or gains on foreign securities; reported in Canadian dollars with any foreign taxes eligible for credit.
  • Foreign Investment Interest – Interest income earned from deposits, bonds, or savings held abroad; fully taxable in Canada and must be reported in Canadian dollars, even if no slip is issued.
  • Foreign Pension Income – Retirement income from a foreign government, employer, or private plan that must be reported in Canadian dollars; exemptions may apply under tax treaties but are applied after gross reporting.
  • Foreign Pension Income – Retirement income from outside Canada, such as U.S. Social Security or U.K. pensions, which may result in excess foreign tax paid and create opportunities to apply carried-forward credits in future years.
  • Foreign Property Disclosure (Form T1135) – A required CRA filing for Canadian residents holding foreign property worth more than $100,000 CAD, including income-generating assets like real estate or investments.
  • Foreign Rental Income – Income from renting out overseas property; must be converted to Canadian dollars and reported on Form T776, with eligible deductions and potential foreign tax credit on Form T2209.
  • Foreign Self-Employment Income – Business income earned from operations outside Canada that must be declared by Canadian tax residents and reported in Canadian dollars.
  • Foreign Tax Credit – A tax relief mechanism allowing Canadian residents to reduce their federal and provincial tax liabilities by the amount of foreign income tax paid, provided the income is also taxable in Canada and the tax was actually paid.
  • Form T1135 (Foreign Asset Disclosure) – Mandatory CRA form for taxpayers with more than $100,000 CAD in foreign property at any point during the year; used to report income and holdings.
  • Form T1135 (Foreign Income Verification Statement) – A CRA form required if the total cost of specified foreign property exceeds $100,000 CAD at any time during the year; used to report details of foreign holdings.
  • Form T2209 – CRA form used to apply a federal tax credit for foreign income taxes paid on employment, pension, or investment income earned outside Canada.
  • Form T776 (Statement of Real Estate Rentals) – The federal CRA form used by Canadian tax residents to report rental income, expenses, and capital cost allowance for Canadian and foreign properties. A separate form must be used for each distinct rental property or group of similar properties.
  • Form TP-128-V (Rental of Immovable Property) – The Quebec provincial form required to report rental income and expenses on the Quebec tax return. Similar to the federal T776, but applies specifically to Quebec tax filings.
  • Form TP-772-V (Quebec Foreign Tax Credit) – The Quebec provincial form used to calculate the foreign tax credit for Quebec residents who paid income tax to a foreign country on income also reported in Quebec; subject to limits based on Quebec tax payable.
  • High Foreign Withholding Tax – Situations where foreign countries impose high taxes (often 15–30%) on income such as dividends, leading to foreign tax credits that may exceed Canadian tax payable and create unused credits.
  • Income Conversion for Tax Reporting – CRA requirement to convert foreign income to Canadian dollars using Bank of Canada exchange rates, either the daily rate or annual average.
  • IRA (U.S. Individual Retirement Account) – A type of U.S. retirement plan; distributions are fully taxable in Canada when withdrawn, and early withdrawal penalties imposed by the U.S. are not deductible or creditable in Canada.
  • Lump-Sum Foreign Gains – One-time capital gains from foreign property or securities that may result in high foreign taxes and low Canadian tax liability, causing unused foreign tax credits.
  • Net Foreign Tax Paid – The amount of foreign tax paid that exceeds the allowable Canadian tax credit in a given year, which may be carried forward for future use.
  • Qualifying Foreign Taxes – Non-refundable income taxes paid to a foreign jurisdiction on income also taxable in Canada, including withholding taxes on investments, employment, pensions, or rental income; excludes sales tax, VAT, or penalties.
  • Rental Expenses – Eligible operating costs that may be deducted against rental income, including property taxes, insurance, mortgage interest, maintenance, advertising, utilities, and management fees. Must be prorated for personal use or co-ownership.
  • Rental Income (Foreign and Domestic) – Income earned from renting out real estate, whether located in Canada or abroad, that must be reported in Canadian dollars. Includes gross rent, parking, storage, and other tenant payments.
  • Social Security – A U.S. government pension; 85% of the benefit is taxable in Canada, and the remaining 15% is exempt under the Canada–U.S. Tax Treaty.
  • Tax Treaties – Agreements between Canada and other countries that determine how certain types of income are taxed, potentially providing exemptions or reducing foreign tax withholding.
  • Tax Treaty Benefits – CRA requires taxpayers to report the full gross amount of foreign income before applying exemptions or credits available through tax treaties.
  • Tracking Unused Credits – The practice of maintaining records of each year’s unused foreign tax credits, including original amounts, remaining balances, and expiry dates, to ensure proper application before expiration.
  • U.S. Employer Pensions – Retirement income from a U.S. employer, taxable in Canada as regular income; a foreign tax credit may be claimed if U.S. tax was withheld.
  • U.S. Retirement Plans (401(k) and 403(b)) – American employer-sponsored retirement accounts; distributions are fully taxable in Canada and may qualify for a foreign tax credit if U.S. tax was withheld.
  • Unused Foreign Tax Credit – The portion of foreign tax paid that cannot be claimed in the current tax year because it exceeds Canadian tax on the same income, and which may be carried forward for up to 10 years.