Jul 19, 2017
“Changes to strategies that have been the basis for shareholder… Read more »
“For countries other than U.S., the foreign social security taxes are no longer a tax credit..”
The CRA recently issued Technical News number 31 discussing the treatment of social security taxes as a foreign tax credit. In the past, the CRA has permitted foreign social security taxes to qualify as a non-business income tax for purposes of the foreign income tax credit. The CRA has now changed its treatment and will no longer allow social security taxes, other than U.S. social security taxes collected under the FICA, to be eligible for a foreign tax credit.
The only reason that the U.S. social security tax is allowed as a tax credit is because of the Canada-U.S. Income Tax Treaty.
This will have implications for any clients who earned a foreign social security income from countries other than the United States.
TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.
The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.