Income Tax Act

Marginal note:Definitions

• 127.54 (1) In this section,

  foreign income

  foreign income of an individual for a taxation year means the total of

  • (a) the individual’s incomes for the year from businesses carried on by the individual in countries other than Canada, and

  • (b) the individual’s incomes for the year (as would be determined if paragraph 127.52(1)(d) were applicable) from sources in countries other than Canada in respect of which the individual has paid non-business-income taxes, as defined in subsection 126(7), to governments of countries other than Canada; (revenu de source étrangère)

  foreign taxes

  foreign taxes of an individual for a taxation year means the total of the business-income taxes, as defined in subsection 126(7), paid by the individual for the year in respect of businesses carried on by the individual in countries other than Canada and 2/3 of the non-business-income taxes, as defined in that subsection, paid by the individual for the year to the governments of countries other than Canada. (impôts payés à l’étranger)

• Marginal note:Foreign tax credit

  (2) For the purposes of section 127.5, an individual’s special foreign tax credit for a taxation year is the greater of

  • (a) the total of all amounts deductible under section 126 from the individual’s tax for the year, and

  • (b) the lesser of

    • (i) the individual’s foreign taxes for the year, and

    • (ii) the amount determined by the formula

      A × B

      where

      A

      is 20.5%, and

      B

      is the individual’s foreign income for the year.