Income exempt under a tax treaty for UK

[CWilson]

Hi,

 

Does anyone know what I should be entering for the "Income exempt under a tax treaty" section for employment income from the UK.  As far as I understand it the UK has a tax treaty with Canada so we don't double pay tax.  I'm currently entering the same figure in the "Income exempt under a tax treaty" as is in the "Foreign employment income not entered on a T4 page".  This does have the effect of cancelling out the foreign income, which I think is correct since I've already paid tax on it in the UK.  But I'm not 100% sure this is the correct thing to do.

 

Does anyone else know about this?

 

Thanks

[clw]

According to the UK/Canada tax treaty, you only pay tax in the country you reside in. So all income should only be reported in the country of residence. Since you are filing a Canadian tax return, there should not have been withholding taxes in the U.K. in the first place.

If your residency status changes during the year, the 'CRA's rule of thumb' is to declare U.K. income in the U.K., and Canadian income in Canada. In both cases, you DO NOT report any 'foreign income', as this defeats the whole purpose of the tax treaty.