Available Now

FOREIGN TAX CREDIT

CRA verifies nearly every foreign tax credit claim and frequently miscalculates the result. Covers the pooling formula, business vs. non-business classification, country-by-country sourcing, and how to defend the calculation when challenged.

Availability
On Demand
Enroll and start immediately
Instructors
Michael Cadesky
Dean Smith

A practitioner-led course on the complete FTC calculation framework. Pooling formula, sourcing rules, expense allocation, US timing mismatches, and how to handle CRA disputes. Enroll now and earn your verifiable CPD certificate.

$150
Enroll Now
Course Details Enter →
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Technical
Corner

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1.5 Hours
Verifiable CPD

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1-Year
All-Access



Foreign Tax Credit

The foreign tax credit is one of the most misunderstood provisions in Canadian tax. The rules are more complex than they look, and the details matter.

The foreign tax credit eliminates double taxation for clients with foreign income, but the rules are more complex than they appear. Getting the result right requires understanding the pooling formula, the business vs. non-business distinction, country-by-country sourcing, and the common points of review at the verification stage so practitioners are prepared when questions arise.


The FTC Formula / s.126 ITA

FTC = LESSER OF (A) or [
(B)
(C)
× (D) ]
(A) Foreign Tax Paid Final tax paid for the year. Business and non-business separated. Country-by-country.
(B) Net Foreign Income Foreign source income net of sourced expenses. Pooled by type and country, not item-by-item.
(C) Modified Net Income Net income adjusted for capital gains exemption, net capital losses claimed, and other deductions.
(D) Tax Otherwise Payable Federal tax after personal credits but before dividend tax credit. Federal credit claimed first.

The calculation is pooled and country-by-country. It is not applied to individual income items, regardless of how the assessment is presented.


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Verification in Practice

Nearly every FTC claim is reviewed by CRA. Knowing the process helps practitioners respond effectively.

CRA verifies foreign tax credit claims at close to 100%. Common review points include the subsection 20(11) limitation, net foreign income figures, and documentation requirements. CRA increasingly requires transcripts rather than foreign tax returns, and not all jurisdictions provide them. The objection deadline is later than most practitioners expect, and the basis for CRA's calculation is worth understanding before any response is filed.


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Pooling Formula
The credit is calculated on a pooled basis by income type and country. It is not applied to individual items, a common misconception that leads to incorrect results.
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Business vs. Non-Business
Classified by Canadian rules, not foreign treatment. The distinction changes the credit amount, the carryforward availability, and whether any provincial relief applies.
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Use It or Lose It
Non-business FTC cannot be carried forward or back. In a year with capital losses and no tax otherwise payable, the credit is permanently lost. Planning must happen before the return is filed.
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Country-by-Country Sourcing
Income and expenses must be correctly sourced before the formula applies. Interest expense and investment fees commonly reduce the net foreign income figure and affect the size of the claim.
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LLCs, Trusts & Attribution
US LLCs produce non-business income under Canadian rules. Attribution rules can strand foreign tax with the attributor while the income moves to the other spouse, creating double taxation with no available relief.
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Common Myths and Misconceptions
The course addresses six widely held misconceptions about FTC calculation and procedure, from how the pooling formula works to objection deadlines that are commonly misunderstood.

Available Now  ·  Enroll and begin immediately

menu_book Technical Corner included  ·  1.5 Verifiable CPD Hours  ·  Michael Cadesky & Dean Smith  ·  $150

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Meet Your Presenters

Michael Cadesky

Michael Cadesky

FCPA, FCA, FTIHK, CTA, TEP (EMERITUS)

Michael Cadesky is the managing partner at Cadesky Tax and a committed contributor to the tax and accounting professions since 1980, earning the title of Fellow from CPA Ontario. He is a past governor of the Canadian Tax Foundation, past chair of STEP Canada and STEP Worldwide, and past chair of the CPA Canada Tax Committee for Small and Medium-Sized Enterprises. Michael is also the co-author of 11 books on tax subjects and the author or co-author of numerous papers and articles on Canadian and international taxation.

Hugh Woolley

Dean Smith

PhD, CFP, TEP, CPA, CA, RWM

As the President of Cadesky U.S. Tax Ltd., Dean has been providing U.S./Canada cross-border planning and compliance for over 30 years. He assists private clients with their personal, corporate, and estate planning needs taking into account the unique challenges of integrating two independent tax systems.

International Tax Course

Navigate the pooling formula, sourcing rules, and CRA's verification process with practitioners who know where CRA goes wrong. Enroll and start immediately.

$150
Enroll Now
Foreign Tax Credit

Foreign Tax Credit

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1.5 Hours Verifiable CPD
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Michael Cadesky & Dean Smith
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Technical Corner
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Quiz & Walkthrough Video
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Slides, Detailed Notes & Course Recording
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1 Year All-Access

Can I start right away?

Yes. Foreign Tax Credit is available on demand. Enroll and begin immediately at your own pace.

Does this course provide CPD?

Yes. You will receive a verifiable CPD certificate for 1.5 hours of instructional learning upon completion.

What is the Technical Corner?

The Technical Corner is a structured walkthrough of the relevant Income Tax Act provisions governing the foreign tax credit, including section 126 and the formula components, the subsection 20(11) and 20(12) limitations, and the section 110.5 election for corporations. It gives you the legislative grounding behind every rule covered in the course.

What is included with enrollment?

Enrollment includes the full course recording, slides, detailed notes, the Technical Corner, and a quiz with walkthrough video. You have one year of all-access from the date of enrollment.

CRA assessed my client differently. Is that covered?

Yes. The course covers CRA's most common calculation errors in detail, including incorrect application of the subsection 20(11) limitation and net foreign income disputes. It also covers when and how to file an objection, and why the deadline is later than most practitioners think.

Is there a cost to enroll?

Yes. Enrollment is $150 and includes everything listed above. This is a one-time payment with no subscription required.

Availability On Demand
CPD Hours 1.5 Hours
Price $150
Enroll Now