Many Canadians own assets outside of Canada. Whether these assets produce income, such as shares in foreign corporations, or are merely personal recreational properties, such as a Florida condominium, there are both Canadian and foreign tax issues that you should know.

Canadian residents are taxed on their worldwide income. This means that no matter where the income originates, it must be reported on your Canadian income tax return in Canadian dollars.

Some sources of foreign income, such as interest or dividends from non-resident corporations, may be subject to foreign withholding tax. Although the investor only receives the net amount after this withholding tax is applied, it is the gross investment income that must be included in income for Canadian tax purposes.

However, in order to encourage Canadian taxpayers to report all of their income and to avoid double taxation, Canada permits its taxpayers to claim a foreign tax credit (within limits) for the foreign tax withheld.