A foreign pension deposited into a bank account may already have foreign tax or other amounts deducted. For Canadian reporting, the starting point is generally the gross pension in Canadian dollars, not just the cash received.
The country and type of payment matter. A public pension, employment pension and foreign retirement-account distribution can have different rules.
Obtain the payment breakdown
Keep the annual statement and payment history showing gross amounts, foreign withholding and other deductions. Identify the pension provider, country, plan type and the period covered.
A payment of 900 units after 100 units of foreign tax represents 1,000 units of gross pension before conversion. Reporting only 900 would hide both part of the income and the tax that may need separate treatment.
Use an appropriate Canadian-dollar conversion and retain the rate source. CRA guidance allows an annual average for pensions received at different times during the year; unusual or one-time payments may need a different approach.
Check the treaty rather than assuming an exemption
Some treaty provisions exempt all or part of particular pension income from Canadian tax. Where applicable, the income is reported and the exempt portion is addressed through the appropriate deduction. Foreign tax paid may instead support a foreign tax credit, subject to its rules and limits.
The CRA does not simply refund tax paid to another country. A foreign withholding amount and an allowable Canadian credit are not necessarily equal.
Review related credits separately
Eligibility for the pension income amount or pension splitting needs its own check. A payment is not eligible for every pension provision simply because a foreign statement calls it a pension.
For a newcomer, first separate the resident period using the established tax-residency date. Keep the pension records, currency calculation and treaty conclusion together so both the gross reporting and any relief can be explained.
