Foreign pensions and retirement savings: how Canada taxes them

How do you report a foreign pension?

The CRA gives these rules for pensions from a foreign country:

• Report the gross pension, before foreign tax, on line 11500.
• Convert to Canadian dollars. Use the Bank of Canada rate on the day you received it. If you got payments at different times in the year, use the average annual rate.
• On a paper return, attach a note with the type of pension and the country.
• Do not subtract foreign tax from the income. Claim it as a foreign tax credit on line 40500 instead.
• If a treaty makes part or all of the pension tax-free in Canada, claim that part on line 25600.

The CRA also says some amounts you receive may not be pension income and may belong on another line. That is common with lump sums and savings plans (see below).

What does each treaty say about pensions?

The India treaty says a pension “arises” in the country of the payer. The Sri Lanka cap does not apply to Sri Lankan government pensions for government service. See all five side by side in Canada’s tax treaties compared.

Example: two retirees, two treaties

Lita lives in Winnipeg and gets a monthly Philippine pension. In 2026 it adds up to $9,000 at the Bank of Canada annual average rate.

• Under the treaty, only the Philippines may tax it.
• The Philippines can charge at most 30% × ($9,000 − $5,000) = $1,200.
• In Canada she reports $9,000 on line 11500 and deducts $9,000 on line 25600. No Canadian tax is due on it.
• She cannot claim a foreign tax credit for any Philippine tax on that pension. The CRA says treaty-exempt income and its foreign tax stay out of the credit calculation.

Ranjith lives in Mississauga and gets a Sri Lankan pension of $12,000 for 2026. Sri Lanka withheld $1,200.

• The treaty lets Canada tax it, and lets Sri Lanka tax it up to 15% ($1,800), or less if Sri Lanka’s normal rate is lower.
• He reports $12,000 on line 11500.
• He claims a foreign tax credit for the $1,200 on Form T2209 (federal) and Form T2036 (provincial, outside Quebec). The CRA says the credit is generally the lesser of the foreign tax paid and the Canadian tax on that income.

Estimate the credit with the foreign tax credit calculator.

Lump sums, provident funds and savings plans

Many newcomers have money in a workplace provident fund or a national savings scheme. Examples are India’s Employees’ Provident Fund (EPF), Public Provident Fund (PPF) or National Pension System (NPS), or similar plans in other countries.

• Lump-sum pension payments are generally reported on line 13000, the CRA says.
• Transfer to an RRSP: the CRA’s Guide T4040 lists some lump sums that can move to an RRSP or registered pension plan. One type is a lump sum from a non-registered pension plan for work done while you were a non-resident of Canada. Amounts from foreign retirement arrangements, such as United States Individual Retirement Accounts (IRAs), can also qualify.
• Interest or growth earned in a foreign account after you become a resident may be investment income in Canada.

What if your home country withheld too much tax?

The CRA’s foreign tax credit folio says tax withheld above the rate set in a treaty is not foreign tax paid for the credit. The credit is worked out at the treaty rate, and the CRA says to ask the foreign tax authority for a refund of the excess.

• You may claim a foreign tax credit in Canada for tax up to the treaty rate.
• The CRA says a certificate of residency may be required to get treaty benefits. Its tax treaties page explains how to get one.

For any refund of the excess, contact the other country’s tax authority.

Credits that may help

• Pension income amount: the CRA says you may be able to claim up to $2,000 on line 31400 (federal amount for 2025), depending on the type of pension. The CRA says a foreign pension that is tax-free in Canada because of a treaty is not eligible.
• Pension income splitting: spouses or partners who were both residents of Canada on December 31 may be able to split eligible pension income with Form T1032. The CRA says a treaty-exempt foreign pension cannot be split.
• Before you arrived: pension received before your residency date is not taxed in Canada, but it counts as world income for benefits. Report it where the software asks for income before entry.

For the whole arrival-year return, follow your first tax return, step by step.

Common mistakes with foreign pensions

• Leaving a treaty-exempt pension off the return. Report it on line 11500, then deduct it on line 25600.
• Reporting the net amount. Report the gross pension and claim the foreign tax separately.
• Claiming a credit on exempt income. If you deducted it on line 25600, leave it out of Form T2209.
• Using the wrong exchange rate. Use the Bank of Canada daily rate, or the annual average for regular payments.
• Missing other foreign income. Interest, rent and dividends from home are taxable too. See how to report foreign income.

Common questions

Sources

• CRA: Line 11500, Other pensions and superannuation (pensions from a foreign country)
• CRA: Line 25600, Additional deductions (exempt foreign income)
• CRA: Line 40500, Federal foreign tax credit
• CRA: Income Tax Folio S5-F2-C1, Foreign tax credit (¶1.35, tax withheld above the treaty rate)
• CRA: Line 31400, Pension income amount (foreign pensions)
• CRA: Pension income splitting
• CRA: Line 13000, Other income (lump-sum payments)
• CRA: Guide T4040, RRSPs and other registered plans for retirement (Chapter 6, transfers)
• CRA: Completing your return for newcomers
• CRA: Tax treaties (includes certificate of residency)
• Canada–India tax agreement, signed January 11, 1996 (Global Affairs Canada treaty text)
• Finance Canada: Canada–Philippines tax convention, signed March 11, 1976
• Finance Canada: Canada–Sri Lanka tax convention, signed June 23, 1982
• Finance Canada: Canada–China tax agreement, signed May 12, 1986
• Canada–Nigeria tax agreement, signed August 4, 1992 (Global Affairs Canada treaty text)
• Bank of Canada: Exchange rates

Checked against these sources on October 10, 2026. Spotted something out of date? Tell us.