# Is it ok not to claim a credit?



## iflo (Apr 14, 2010)

Here's the situation. I have two funds, XIC and VTI in my taxable account. Both paid taxes to foreign countries ("unknown" and "USA", respectively). Now, the netfile restrictions (http://www.netfile.gc.ca/rstrctns-eng.html) state that you cannot use netfile if you claim "foreign taxes paid to more than one country".

So in my case, I am not allowed to use netfile. However, the amount of foreign taxes paid to "unknown" from XIC in my case is so small that it would cost me more to print out and mail my return than I would gain from the tax credit.

Of course I will report the tax paid (box 34 on my T3), but do I have to claim it for the foreign tax credit? I would just as soon not claim the credit on that amount and netfile it in instead.


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## iflo (Apr 14, 2010)

After another look at the restrictions page, there is also a line that states you cannot file if:
- You're claiming less than the maximum federal foreign tax credit.
Looks like I cannot use netfile.

I imagine that this must affect a lot of people. If you hold more than one fund/etf in a taxable account, there's a pretty high chance that you paid foreign taxes to more than one country. Is everyone just printing and mailing in their returns?


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## cardhu (May 26, 2009)

You are not obliged to claim the credit.


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## iflo (Apr 14, 2010)

After reading into this a bit more, it looks like the "claiming less than the maximum federal foreign tax credit" exclusion for netfile is to stop people from trying to pass on the credit to the provincial foreign tax credit.

I think I'm ok if I don't claim part of the foreign taxes paid.


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## iflo (Apr 14, 2010)

I ended up contacting ishares to find out why XIC pays foreign taxes, and was told that it is because it holds Tim Hortons. So those taxes paid were to the US. So in my case, all foreign taxes (from VTI and XIC) were paid to the US, and I can claim all of it and still netfile.


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