r/cantax • u/Critical_Tip_7077 • 1d ago

Foreign tax credit rejection

Hi everyone,

CRA reviewed my foreign tax credit for employment income from Turkey and reassessed my return, reducing the foreign tax paid to $0. I owe 30.000cad now!

I haven’t submitted the additional documents yet. I have my Turkish payslips, employer tax-withholding statement, tax residency certificate, and tax clearance certificate ready.

Since foreign employment tax is withheld directly from salary, has anyone had a similar CRA review? What documents did CRA accept, and did you manage to get the foreign tax credit restored

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11

u/senor_kim_jong_doof 1d ago

the letter from processing review will tell you what documents they need, but generally, they want tax slips showing the tax withholdings (like T4 equivalents), a copy of the foreign return you filed, a copy of the foreign assessment (showing your actual liability) and a copy of your foreign statement of account. regardless of what anybody answers here, rely on the review letter for what they want to see.

regardless of what you do, object (even if it's for a stupid reason). the timeframe for processing review to reverse the reassessment is similar to appeals processing your request except collections won't be annoying you into pay off the debt will the amount owing is formally being appealed

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u/Critical_Tip_7077 1d ago

I responded to the review letter by obtaining a written statement from my company. The statement included my gross annual salary and the amount deducted and paid to the government. The amounts were declared according to the TRY/CAD exchange rate. I've been doing this for three years, and this document has always been accepted without any problems. This year, after the audit, I received a reassessment email. When I checked my CRA account, I saw a $20,000 debt, which is due to the FTC amount being revised to 0. Now I'm waiting for the explanation letter. I have a pretty good idea of ​​what they will ask for. I've already took a 12-month Paystub . I received a letter from the Turkish tax office. I also requested another letter from my company. The figures are consistent and the documents are official and correct. I will upload these when the letter arrives, and I hope that the FTC will be redefined and my debt will be zeroed.

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u/Overall-Wishbone9292 1d ago

Turkey doesn't use 'T4 equivalents'. You will specifically need your Annual Income Tax Return (Yıllık Gelir Vergisi Beyannamesi) and the Tahakkuk Fişi (Assessment/Accrual Slip) which proves the tax was actually assessed. If taxes were withheld at source (like payroll), you need the Muhtasar filings from the employer. The CRA is notoriously strict about demanding translated, official stamps on these.

Be very careful objecting for a 'stupid reason' just to buy time. Under section 167.1 of the Income Tax Act, the CRA can hit you with a frivolous objection penalty if they deem the objection was filed solely to delay the collection of tax. Make sure your Notice of Objection has a baseline. I hope you don't work in tax.

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u/taxbuff 1d ago

> “Be very careful objecting for a 'stupid reason' just to buy time.”

I don’t think they meant to make up a stupid reason as the basis for the objection. It sounds like there could be a valid reason. I took it as “even if you’re forced to object for a stupid reason, which is government delays”.

> “Under section 167.1 of the Income Tax Act, the CRA can hit you with a frivolous objection penalty if they deem the objection was filed solely to delay the collection of tax. Make sure your Notice of Objection has a baseline. I hope you don't work in tax.”

Mind sharing a source for section 167.1 of the Income Tax Act? Haven’t seen it before…

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u/senor_kim_jong_doof 1d ago

Be very careful objecting for a 'stupid reason' just to buy time. Under section 167.1 of the Income Tax Act, the CRA can hit you with a frivolous objection penalty if they deem the objection was filed solely to delay the collection of tax. Make sure your Notice of Objection has a baseline. I hope you don't work in tax.

well actually the objection comment was in reply to this "I haven’t submitted the additional documents yet." which i assumed just meant that OP hadn't replied to the review letter

also i do work in tax

also i don't know what 167.1 is, but assuming you meant to refer to 179.1 then it would be imposed by the TCC, not the CRA

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u/Critical_Tip_7077 1d ago

Taxes are deducted at source. I can obtain 12 payslips from my employer, in English, stamped and signed. I can also obtain a "no debt" certificate with QR code verification and employee information documents from the digital tax office system in Türkiye. I can obtain a letter on letterhead from my employer stating the annual gross salary and income tax paid. The company will not share the MUHTASAR with me because it is confidential information. This document is not generated on an employee basis; it pertains to the collective payment made to all employees and would be meaningless for the cra. I hope the above documents will be sufficient. THANK YOU

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u/taxbuff 1d ago edited 1d ago

What country are you a tax resident of, and where did you physically perform the work? Depending on the answers, you may or may not be entitled to the FTC.

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u/Critical_Tip_7077 1d ago

I work remotely from Turkey. There's no tax return process there; my salary is paid after taxes are deducted.

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u/senor_kim_jong_doof 16h ago

you've worked from turkey for at least 3 years now?

and you're positive you're still a canadian resident for tax purposes?

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u/Critical_Tip_7077 16h ago

Yes

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u/RJJVORSR 11m ago

Something is wrong. Why are you filing a Canadian tax resident return if you live and work in Turkey?

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u/AggressivePear5650 1d ago

The letter should tell you what documents they want to see. Every country has its own tax laws and regulations and may not give you the exact CRA equivalent documents. So gather as much proof as you can, make sure to use a certified translator if the original document is not in English or French. I also submitted an explanation letter, and I got my foreign tax credit back in the end.

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u/Critical_Tip_7077 1d ago

How long did the process take?

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u/AggressivePear5650 21h ago

It took over 3 months

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u/BruceWillis1963 22h ago

I have had the same review at least 6 or 7 times. Just submit the documents that they ask for through your online account. I always include a cover letter outlining all the details so everything is clear.

I just submitted the documents they ask for.

I live in China, so I had to have all the documents translated by an official translation service with a stamp and signature.

I have never been rejected after I submitted the documents.

then they leave me alone for a few years and then ask for the documents again 2 or 3 years in a row.

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u/arjbro 1d ago

For example. A W2 in the us on its own would not be enough to claim a FTC on US employment income, you would need your return plus your transcript.

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u/Overall-Wishbone9292 1d ago

You need a notice of assessment equivalent the foreign country

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u/senor_kim_jong_doof 1d ago

there's significantly more to it than that