I’m playing with some foreign income scenarios to better understand how Canada applies foreign tax credits between the different categories of income (employment, business, investment, capital gains).
I’m also looking at how the surtax on non-Canadian income is applied. In the process, I discovered what looks like a BUG on the T2209 form, as the numbers generated in Box 6 (and transferred to Box 7 to 10) don’t look right.
Here’s the scenario that I created on this 2021 tax return:
- Business Income: 1,000,000 Mexican Pesos = $61,810 CDN
- Foreign Tax Paid: 150,000 Mexican Pesos = $ 9,271.50 CDN
This is the ONLY income I have on this tax return.
I have the Taxpayer setup with a birthdate of 1975, Single, Canadian Status, declaring “Non-Resident” status. No prorations used, so claiming non-residency for the entire year.
Here is a snapshot of the T2209 showing the bizzare numbers generated for Line 6
of $ 234,497,479.24
I recreated this same scenario on a 2020 tax return and it too generates these ridiculous numbers in box 6.
Line 6 states the Federal surtax on income earned outside Canada:
- amount from Line 10 of Part 2 on form T2203 = $ 2,701.24
- Line 42900 = $ 7,903.75 x 48% = $3,793.80
Where does the $ 234,497,479.24 figure come from ??? Is this accurate?