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Federal foreign non-business income tax credit
Reduces Canadian tax on foreign non-business income
Last Update: April 9, 2026
Funding available
Varies by project
Timeline
- Open continuously
Location
Canada
Overview
This program reduces Part I tax for corporations claiming a federal foreign non-business income tax credit. It applies to foreign non-business income such as dividends, interest, and capital gains taxed abroad, and requires Schedule 21.
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Opportunity Score
Moderate potential, but conditions must align.
At a glance
Funding available
Financing goals
- No objectives are currently available
Eligible Funding
- Varies by project
Timeline
- Open continuously
Eligible candidates
Eligible Industries
- All industries
Location
- Canada
Legal structures
- For-profit business
Annual revenue
- All revenue ranges
Organisation size
- All organization sizes
Audience
- Canadians
Next Steps
1
Determine your project
2
Validate your eligibility
Documents Needed
- Schedule 21 completed for each country.
- Proof of foreign income earned.
- Proof of foreign tax paid.
Official resources
Eligibility
Who is eligible?
- Canadian-resident corporations.
- Authorized foreign banks.
Who is not eligible
- Corporations with only treaty-exempt foreign income for the claim.
- Corporations claiming foreign taxes on foreign business income under this credit.
Ineligible Costs and Activities
- Foreign tax on treaty-exempt income.
- Foreign tax on dividends from foreign affiliates.
- Foreign tax on income from a foreign business.
- Taxes related to property expected to produce no profit.
Eligible geographic areas
- Canada
How to apply
1
Collect and review financial documents
- Gather all relevant documentation on foreign non-business income earned
- Identify countries where foreign taxes were paid
- Ensure the income qualifies under the credit requirements
2
Complete Schedule 21 for each country
- Fill out Part 1 of Schedule 21 for each country where foreign income tax was paid
- Ensure accurate calculations for each country separately
- Use additional Schedules if required for multiple countries
3
Calculate and enter total credit
- Add all allowable foreign non-business income tax credits in column I of Schedule 21
- Enter the total allowable credit or a lesser amount on line 632
- Verify all figures for accuracy before proceeding
4
Attach and submit with tax return
- Attach completed Schedule 21 to your federal tax return
- Ensure all supporting documents are included
- Confirm compliance with tax treaty exemptions if applicable
Processing and Agreement
- Calculate the credit using Schedule 21.
- Complete a separate calculation for each foreign country.
- Enter the total allowable credit on the T2 return.
- Attach supporting schedules and documents with the return.
Additional information
- The credit is calculated separately for each foreign country.
- Foreign taxes related to treaty-exempt income are not included.
- Unused foreign business income tax credits may be carried back or forward under the schedule rules.
Frequently Asked Questions about the Federal foreign non-business income tax credit Program
What is the Federal foreign non-business income tax credit?
This program reduces Part I tax for corporations claiming a federal foreign non-business income tax credit. It applies to foreign non-business income such as dividends, interest, and capital gains taxed abroad, and requires Schedule 21.
Who is eligible for the Federal foreign non-business income tax credit program?
To be eligible for the Federal foreign non-business income tax credit program, you must:
Canadian-resident corporation.
Foreign non-business income taxed abroad.
Income and tax calculated by country.
Who can I contact for more information about the Federal foreign non-business income tax credit?
You can contact Canada Revenue Agency (CRA).
Where is the Federal foreign non-business income tax credit available?
The Federal foreign non-business income tax credit program is available across Canada.
Is the Federal foreign non-business income tax credit a grant, loan, or tax credit?
Federal foreign non-business income tax credit is a Tax Credits
Who are the financial supporters of the Federal foreign non-business income tax credit?
Federal foreign non-business income tax credit is funded by Canada Revenue Agency (CRA)