Form T2209 is how you work out the federal foreign tax credit when you've paid income or profits tax to another country on income you also report on your Canadian return. You calculate a non-business credit and a business credit, add them, and claim the total from line 13 of the form on line 40500 of your return, so the same income isn't fully taxed twice.
Everything below comes from the 2025 version of Form T2209 and its CRA form page, as of October 2026. Use the version for the year you're claiming: older years have their own forms on the CRA site.
Who can claim the federal foreign tax credit
You can claim it if you were resident in Canada at any time in the tax year and you had to include, on your Canadian return, income from a country other than Canada that you paid non-business or business income tax on. Tax treaties can change whether you're eligible, so check the treaty with that country before you assume the credit applies.
Two exclusions catch people. If you deducted income on line 25600 because it isn't taxable in Canada under a treaty, leave that income and its foreign tax out of the form. And foreign income earned inside your TFSA doesn't go on T2209 at all.
The two parts of Form T2209
| Part | What goes in | Key lines |
|---|---|---|
| Non-business foreign tax credit | Tax paid abroad on investment income, pensions and employment income from another country | Line 43100 (tax paid), line 43300 (net foreign non-business income) |
| Business foreign tax credit | Tax paid abroad on business income earned in that country | Line 43400 (tax paid plus unused credits), line 43900 (net foreign business income) |
| Total credit | Line 11 plus line 3 | Line 13, claimed on line 40500 of your return |
For each part, the credit is the lower of two numbers: the foreign tax you paid, or your net foreign income divided by your net income, multiplied by your basic federal tax. That second number is the limit. It stops a high foreign tax rate from wiping out Canadian tax on your Canadian income.
How to fill in T2209, step by step
- Do every calculation in Canadian dollars.
- Name the country or countries you're claiming for at the top of the page.
- Enter the non-business tax you paid to that country on line 1 (line 43100) and work out your net foreign non-business income (line 43300).
- Work the formula with your net income from line 23600 and your basic federal tax, then enter the lower amount on line 3.
- Repeat for business income tax on lines 4 to 11 if you had a business abroad.
- Add lines 11 and 12 to get line 13, and claim it on line 40500 of your return.
If you were a partner in a partnership that paid foreign taxes, include your share from the financial statements or from boxes 171 and 172 of your T5013 slip. Employees in a profit-sharing plan get the foreign figures they need on their T4PS slip, in boxes 37 to 39.
The 15% cap most people miss
Here's the rule that trips up investors with foreign shares. If you paid tax on income from property outside Canada, other than real or immovable property, your non-business foreign tax credit for that income can't be more than 15% of your net income from that property. Dividends from foreign shares are the usual example.
The part of the foreign tax you paid above 15% isn't lost, though. You may be able to deduct it on line 23200 of your return instead. So if another country withheld more than that on your dividends, claim up to the cap as a credit and look at the deduction for the rest.
Treaty rates, US Social Security and carryforwards
- If you paid more foreign tax than the treaty says you had to, the CRA treats the excess as a voluntary contribution, and it doesn't qualify as foreign tax paid. Ask the foreign tax authority for that refund instead.
- Contributions under the US Federal Insurance Contributions Act (FICA), including Social Security and Medicare taxes, can qualify, for example where your US employment was temporary and you won't get a financial benefit from those contributions.
- Unused business foreign tax credits can be carried forward 10 years and carried back 3 years.
- If you were a resident of Quebec, multiply the business income tax you paid by 55% on the business part of the form.
Documents to keep or send
If you file electronically, keep everything in case the CRA asks later. If you file on paper, include the form, a note showing your calculations and proof of the foreign tax, such as a notice of assessment from the foreign tax authority. If you paid tax to the US, attach your W-2, your US 1040 return and your US account transcript. Documents in another language need the original plus an acceptable English or French translation, and the translator can't be you.
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If your foreign tax came on a Canadian slip, such as a T5 slip for foreign investment income, keep it with your T2209 working. And if you hold foreign investments costing more than the reporting threshold, check whether you also owe a T1135 that year.
The verdict
T2209 isn't hard once you see it's two small fractions. Convert everything to Canadian dollars, keep the foreign tax to what the treaty allows, watch the 15% cap on foreign dividends and deduct the excess on line 23200. If you file a US return as well, the mirror image on that side is Form 1116.
Frequently asked questions
Where do I claim the T2209 credit on my return?
Claim the amount from line 13 of Form T2209 on line 40500 of your return.
Is there a limit on the foreign tax credit for foreign dividends?
Yes. For income from property outside Canada, other than real property, the non-business credit can't be more than 15% of your net income from that property. You may be able to deduct the excess on line 23200.
Can I carry forward unused foreign tax credits?
Unused business foreign tax credits can be carried forward 10 years and carried back 3 years.
Do US Social Security taxes count for T2209?
Contributions under the US Federal Insurance Contributions Act (FICA), including Social Security and Medicare taxes, can qualify under the conditions the CRA sets out on the form.
Does foreign income in my TFSA go on T2209?
No. Don't include foreign income earned in your TFSA or any foreign tax paid on it.
