Foreign Income After Moving to Canada
How foreign pensions, rent, interest, U.S. Social Security and work income are taxed once you live in Canada, the foreign tax credit, exchange rates and T1135.
The short version
- From the day you become a resident of Canada, you report your world income on your Canadian return: foreign pensions, rent, interest, dividends and any work still paid from abroad.
- Income earned before you arrived isn't taxed here, but CRA asks for the amount on your first return to work out your benefits.
- Tax paid to the other country usually becomes a foreign tax credit here, so the same income isn't fully taxed twice. You pay the higher of the two rates, roughly.
- Convert to Canadian dollars at the Bank of Canada rate for the day, or the annual average rate for income received through the year.
- Foreign bank accounts and investments costing more than $100,000 in total go on form T1135, starting the year after you arrive.
Foreign Income After Moving to Canada
Moving to Canada doesn't mean leaving your money behind, and Canada doesn't expect you to. It just wants to know about it. Once you're a resident, CRA taxes your income from everywhere, and your old country may still tax some of it too. The system for sorting that out works, mostly: treaties decide who taxes first, and the foreign tax credit stops the worst of the double tax. The part people miss is the reporting, which carries penalties even when no tax is owing.
How Each Kind of Foreign Income Is Taxed
| Foreign income | On your Canadian return | Double tax relief |
|---|---|---|
| Foreign employment income | Fully taxable, line 10400 | Foreign tax credit for tax paid abroad |
| Foreign pension or annuity | Taxable, line 11500; some treaties exempt part | Foreign tax credit, or a treaty deduction on line 25600 |
| U.S. Social Security | Generally 85% taxable; 15% is deducted on line 25600 (50% for some people receiving it since before 1996) | The U.S. doesn't usually tax it for Canadian residents |
| Foreign interest and dividends | Fully taxable, line 12100; no dividend tax credit | Foreign tax credit, usually limited to 15% |
| Foreign rental income | Net rent on form T776, with Canadian rules for expenses | Foreign tax credit |
| Gifts and inheritances from abroad | Not taxable | Not needed |
The credit itself, and its limits, are on foreign tax credits. Rental rules: rental income. Inheritances: inheritance tax.
Income still coming from your old country?
Tell the assistant which country, what kind of income, how much and what tax was taken off. It shows how to report it here, the foreign tax credit, and whether T1135 applies.
Example: A Pension From the U.K.
| Amount | |
|---|---|
| U.K. pension received in 2026 | £12,000 |
| Converted at an annual average rate of, say, 1.85 | $22,200 reported on line 11500 |
| U.K. tax deducted | Depends on the treaty and the type of pension. Credit any U.K. tax as a foreign tax credit. |
| Canadian tax | At your normal rates, with the pension income credit if it's a life annuity from a pension plan |
The exchange rate is illustrative; use the Bank of Canada's published average for the year. Private pensions from many treaty countries are taxed only where you live, but government service pensions often stay taxable in the paying country. Check the treaty with your old country, or ask. How retirement income adds up: retirement income calculator; the credit: pension income amount.
Your First Year: What to Report
- Your arrival date, on the first page of the return; income before it isn't taxed here.
- Foreign income after arrival, converted to Canadian dollars, by type, as in the table above.
- World income before arrival, in the box CRA asks for, so benefits like the Groceries and Essentials Benefit and the Canada child benefit are worked out correctly.
- Foreign tax paid on income after arrival, for the credit.
- From next year, form T1135 if your foreign property cost more than $100,000; see form T1135.
The whole first return, step by step: your first tax return in Canada. Assets you brought with you get a fresh cost base; see property you owned before moving.
Mistakes With Foreign Income
- Thinking money left abroad isn't taxed. Residents are taxed on income wherever it's earned or kept. CRA now receives bank account information from many countries.
- Bringing savings into Canada and reporting it as income. Moving your own money in isn't income. Only what it earns after you arrive is.
- Skipping T1135 because no tax is owing. The penalty starts at $25 a day, up to $2,500 a year, for late filing alone.
- Using the wrong exchange rate or no conversion at all. CRA accepts Bank of Canada rates, used consistently.
- Forgetting the other country's return. U.S. citizens file U.S. returns wherever they live; see U.S. investments.
Foreign Income Questions
Do I have to report foreign income in Canada?
Yes, if you are a resident of Canada. Residents report world income from the date they became resident. Income from before you arrived is not taxed, but your first return asks for it to calculate benefits.
Will I be taxed twice on foreign income?
Usually not in full. Tax paid to the other country generally becomes a foreign tax credit on your Canadian return, and tax treaties decide which country taxes certain income first.
Is U.S. Social Security taxable in Canada?
Generally yes, but only 85% of it: the full amount is reported and 15% is deducted on line 25600. Some people who have received it continuously since before 1996 deduct 50% instead.
What exchange rate do I use for foreign income?
The Bank of Canada rate on the day you received the income, or the Bank of Canada annual average rate for income received throughout the year. Use the same method consistently.
Is money I bring into Canada taxable?
No. Transferring your own savings, a gift or an inheritance into Canada is not income. Only income those funds earn after you become a resident is taxable.
Sources: CRA, Newcomers to Canada; CRA, Form T1135; Bank of Canada, Exchange rates. Checked October 2026. The U.S. Social Security inclusion rules are summarized from professional sources and CRA guide instructions; the 50% rule has conditions. Treaty treatment of pensions varies by country and type of pension; we have not checked each treaty. The U.K. example is illustrative.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.