Foreign tax credits: Practical considerations for compliance

By Faith Grassa and Elias Zafiridis ( December 17, 2025, 1:22 PM EST) -- Income that is earned abroad by Canadian residents — whether it’s through employment, investments or business activities — is typically taxed in the country in which it was earned. Canadians will also be taxed on their global income. This overlap in taxation authority can lead to double taxation of income. To prevent this, on their Canadian tax return, taxpayers can use the foreign tax credit (FTC), which enables Canadian residents to claim a credit for qualifying foreign income taxes they have paid....