Federal foreign tax credit or deduction?

[octane99]

Hello, I just have a question : For canadian tax. Can I use both the Foreign Income Taxes as a Deduction From Income (IT-506) and Federal foreign tax credit at the same time (IT270) for my foreign employment income?


I read the Income Tax act, section 20(11) says:


(11) In computing the income of an individual from a property other than real property for a taxation year after 1975 that is income from a source outside Canada, there may be deducted the amount, if any, by which,

(a) such part of any income or profits tax paid by the taxpayer to the government of a country other than Canada for the year as may reasonably be regarded as having been paid in respect of an amount that has been included in computing the taxpayer's income for the year from the property,

exceeds

(b) 15% of the amount referred to in paragraph 20(11)(a).



My question would be: is foreign employment income can be regarded as income from a property other than real property?

Or in another way, can tax payer choose credit or deduction in respect of the foreign tax paid for the foreign employment income ( I believe that in most case, the foreign tax credit is preferrable) ?


Thank you all.

[nelsona]

This section relates to business income. If you are self-employed, you might be able to use it.
I *think* this is dealing more with with "business tax" (ie. a tax on assets)

IT-506:subsections 20(11) and (12) which provide for the deduction of certain foreign taxes in the computation of a taxpayer's income from a business or property

It cannot be from wages, as this is specifically defined:

IT-506: Non-business-income taxes paid in respect of employment income are not deductible under subsection 20(12) since subsection 8(2) restricts employment income deductions to those allowed under section 8


I know that this section is used by those whose tax credits are limited by treaty, for example, tax on self-employment income paid in US by US citizens living in canada (they pay this tax only because they are US citizens) cannot be credited in canada by treaty; In such case they use a deduction instead.