CRA will deny FTC for income tax imposed by a foreign jurisdiction on a Canadian employee’s investment earnings sourced outside that county

If a Canadian-resident employee working in "Country A" (a non-Treaty country) is subject to Country A taxes on her worldwide income, Canada will not accord a foreign tax credit for any Country A taxes which thereby are imposed on sources outside Country A. If the Canadian employer reimburses the employee for Country A taxes, then (following Gernhart) such reimbursements will be taxable benefits for Canadian purposes.

Summaries of 11 September 2014 T.I. 2013-0495091E5 under s. 126(1) and s. 6(1)(a).