If you have received income from foreign sources, such as pension income, you must report it in Canadian dollars on your tax return.
To convert the foreign source income, you must use the rate of exchange that was in effect at the time the money was received or the average exchange rate for the year as published by the Bank of Canada. You must report the amount of foreign income before deducting any tax that was withheld at the source. However, if you have paid tax on that same income in a foreign country, the amount of foreign tax paid may be eligible for a Canadian tax credit or deduction.
Some income may also be exempt under international tax treaties.
There may be several tax planning opportunities, depending on the source and type of foreign income you received. To help you identify these opportunities, consult a Chartered Accountant.
Information for Tax Tips is provided as a public service by the Chartered Accountants of British Columbia.