Federal foreign business income tax credit

Q: How much funding can be received?

There is no informations about how much funding can be received.

Q: What is the deadline to apply?

The program is accepting continuous intake

Q: Is the Federal foreign business income tax credit a grant, loan, or tax credit?

Federal foreign business income tax credit is a Tax Credits

Q: Who are the financial supporters of the Federal foreign business income tax credit?

Federal foreign business income tax credit is funded by Government of Canada

Q: Who is eligible for the Federal foreign business income tax credit program?

To be eligible for the Federal foreign business income tax credit program, you must: • Corporation must have paid foreign tax on business income earned abroad • Credit applies to reduce Part I tax on income from the same foreign country

Q: Who can I contact for more information about the Federal foreign business income tax credit?

You can contact Government of Canada.

Q: Where is the Federal foreign business income tax credit available?

The Federal foreign business income tax credit program is available across Canada.

Last Update: July 22, 2025

Canada

Offsets Canadian taxes for business income taxed abroad

At a glance

Eligible Funding

No Condition

Timeline

Unspecified

Financing Type

Tax Credits

Eligible Industries

All industries

Funds Providers

Government of Canada

Program status

Open

Overview

The Federal Foreign Business Income Tax Credit allows Canadian corporations to reduce their Part I tax by claiming credits for foreign taxes paid on business income earned abroad, specifically for each foreign country where income was generated. There is no stated maximum funding amount; the program aims to prevent double taxation on foreign business income, with eligibility tied to corporations paying foreign tax on business profits.

Financing terms and conditions

The credit can be carried back to the 3 previous tax years or carried forward for 10 tax years if unused.
The amount of tax credit claimed must correspond to the foreign business income tax paid and is limited to reducing the Part I tax relating to income from the same foreign country.

Activities funded

Operating a business and generating income in a foreign country that is subject to foreign income or profits tax.

Eligibility

The applicant must be a corporation that has paid foreign tax on income or profits earned from operating a business in a foreign country.
The corporation must be subject to Part I tax in Canada.
The foreign business income must not be exempt from tax in Canada under an income tax treaty.

Who is eligible?

Corporations operating businesses in foreign countries that have paid foreign business income tax

Who is not eligible

Companies seeking credits for foreign tax paid on income that is exempt from tax in Canada under an income tax treaty.

Eligible expenses

Foreign business income taxes paid on income or profits earned by the corporation from operating a business in a foreign country, when not exempted under an income tax treaty.

Eligible geographic areas

Corporations operating and paying tax in Canada.

How to apply

Confirm eligibility for credit

Review the eligibility to ensure your corporation has paid foreign tax on income or profits earned from business operations in a foreign country
Confirm that the foreign tax does not relate to income exempted under an income tax treaty with Canada

Complete Schedule 21 Part 2

Complete Part 2 of Schedule 21 for each foreign country where business income tax was paid
Calculate the foreign business income tax credit separately for each country
Use additional Schedules if necessary

Calculate and report total credit

Add all allowable foreign business income tax credits in column J of Schedule 21
Enter the total allowable credits on line 636

Establish continuity of unused credits

Complete Part 3 of Schedule 21 to document the continuity of unused credits, including credits expired, transferred, deducted, or carried back
Ensure continuity and proper application for each country
Use additional schedules if necessary

Claim carryback or carryforward credits

To carry back unused credits, complete Part 4 of Schedule 21
Carry unused credits back up to 3 years and forward up to 10 years
Use credits to reduce Part I tax for the same foreign country

Submit tax return and documentation

Complete all relevant schedules and documentation
Submit your corporate income tax return with Schedule 21 and supporting documents to the Canada Revenue Agency

Additional information

If foreign tax is paid on income that is exempt from tax in Canada under an income tax treaty, it does not qualify for this credit.
Foreign exploration and development expenses must be deducted on a country-by-country basis when calculating income from foreign sources.
Carryback of unused credits is permitted for up to 3 previous tax years; carryforward is allowed for up to 10 tax years.
The credit is determined separately for each country and must be tracked accordingly on the required forms.

Apply to this program

Frequently Asked Questions about the Federal foreign business income tax credit Program

Here are answers to the most common questions about the Federal foreign business income tax credit. This section explains what the program is, how much funding is available, eligibility requirements, application deadlines, and other important details to help you determine if this grant is right for your business.