My client received a Schedule K-1 from a limited partnership that shows the following (amounts rounded up):
Box 1 Ordinary Business Income $30,000
Box 5 Interest Income $10
Foreign Transactions
16A Name of country: Canada
16C Foreign Income: $30,000
16P Foreign Tax Paid Canadian Income tax Withholding $1200
16P Foreign Tax Paid Eritrea Income $9150
Also with the K-1, I am provided the T5103 reporting the Canadian Income and the Canadian tax withholding. This is pretty straight forward, I know what I need to do with this.
My questions are:
- If I convert the Schedule K-1 using the same conversion rate used for Canadian tax withholding (because I can see the USD and the CAD amount), then can I then report the income from Eritrea under "other income" and then claim the foreign tax credit on the non-resident Canadian return?
Example $1200 USD Canadian withholding
$1,586 CAD Canadian Withholding reported on T5013
A conversion rate of 1.322
Ordinary Income $30,000 USD
Ordinary Income $39,650 CAD (Using the 1.322 conversion rate)
Ordinary Income $12,231 CAD Reported on T5013
Ordinary Income $27,419 CAD Income from Eritrea
By reporting the other income and claiming the foreign tax credit, this brings the tax due amount down by almost $600USD.
Feedback would be greatly appreciated.
Box 1 Ordinary Business Income $30,000
Box 5 Interest Income $10
Foreign Transactions
16A Name of country: Canada
16C Foreign Income: $30,000
16P Foreign Tax Paid Canadian Income tax Withholding $1200
16P Foreign Tax Paid Eritrea Income $9150
Also with the K-1, I am provided the T5103 reporting the Canadian Income and the Canadian tax withholding. This is pretty straight forward, I know what I need to do with this.
My questions are:
- If I convert the Schedule K-1 using the same conversion rate used for Canadian tax withholding (because I can see the USD and the CAD amount), then can I then report the income from Eritrea under "other income" and then claim the foreign tax credit on the non-resident Canadian return?
Example $1200 USD Canadian withholding
$1,586 CAD Canadian Withholding reported on T5013
A conversion rate of 1.322
Ordinary Income $30,000 USD
Ordinary Income $39,650 CAD (Using the 1.322 conversion rate)
Ordinary Income $12,231 CAD Reported on T5013
Ordinary Income $27,419 CAD Income from Eritrea
By reporting the other income and claiming the foreign tax credit, this brings the tax due amount down by almost $600USD.
Feedback would be greatly appreciated.
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