CRA confirms that EPSP beneficiaries are not entitled to a s. 20(11) or (12) deduction

The beneficiary of an employees profit sharing plan who has been allocated a share of the non-realty foreign income from property of the plan may claim the employee’s share of the non-business income tax (NBIT) of up to 15% that is paid by the plan on that income. CRA confirmed that such employees are not permitted an s. 20(11) or (12) deduction for the foreign taxes paid on such income in excess of a 15% rate because “unlike paragraph 144(8.1)(b) … there is no provision of the Act which deems any portion of the foreign NBIT paid by an EPSP to have been paid by an employee beneficiary for the purposes of subsection 20(11) or 20(12).” (This absence of a flow-through provision also is relevant, for example, to the unitholders of a mutual fund trust.)

If the total foreign NBIT paid to all foreign countries is not more than $200, CRA does not require an individual to do a separate calculation for each country in order to claim a foreign tax credit. CRA confirmed that andy NBIT deemed to be paid by the individual under s. 144(8.1)(b) is included in this $200 basket.

Neal Armstrong. Summaries of 31 January 2018 External T.I. 2016-0676431E5 under ss. 125(1), s. 144(8.1)(b) and s. 20(11).